Pub. 3 2013-2014 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2014 11 FEATURE ARTICLE BY VERN HANSEN J.R. BRUNO& ASSOCIATES Calculating Global Cash Flow & DSC For the SBA and Business Loan Credit Memo T he regulators are nowunderscoring that calculating global cash flow and global debt coverage is part of prudent under- writing and risk assessment that insti- tutions should practice for business loans, includ- ing Small Business Administration (SBA) loans. “Rather than just measuring the income and debt service requirements of the borrower, global analysis combines available cash flow from the borrower and all affiliates and all guarantors, to give a global, or combined picture of cash available for meeting all global debt service obligations of all parties.” Under newpolicies issued by the SBA for loans up to and including $350,000, calcu - lating global cash flow and debt coverage is now required. Rather than just measuring the income and debt service requirements of the bor- rower, global analysis combines available cash flow from the borrower and all affili - ates and all guarantors, to give a global, or combined picture of cash available for meeting all global debt service obligations of all parties. This assessment helps measure the risk of non-borrowing but related entities (and guarantors), of becoming a drain on the borrower’s cash flow resources. To make this analysis, you’ll need: • Financial statements and tax re-  GLOBAL CASH  continued on page 12