Lenders use the Global Debt Service Coverage Ratio to better understand your credit profile and it can either make or break your loan application
If you read our most recent blog, the Global Debt Service Coverage Ratio (GDSCR) should not be a new term.
Just in case you haven’t, the GDSCR is a tool that lenders use to verify your credit profile. It takes the sum of your gross income in a given year and divides it by the sum of your debts in the same year.
The ratio takes both your personal and business credit profiles into account and can risk rejection if one lowers the ratio below an acceptable GDSCR.
This is what happened to one Wallace Capital Funding, LLC client, a businessman who owns a mortgage broker, construction company and investment company. In addition to this, he and his wife also invest in real estate. With all of these income, debts, assets and liabilities, there was a lot of ground to cover.
Although he understood personal mortgage and the debt to income ratio, which is all of your monthly debt payments divided by your gross monthly income, he did not understand why we needed to know all of the details surrounding his business ventures.
This is because to calculate the GDSCR, all of this information is within his gross income — which includes “wages and salary plus other forms of income including pensions, interest, dividends, and rental income,” according to finance website Investopedia.
And unless your business is a mid-market company with revenues above $10 million, your personal credit profile may hold more weight in the ratio than your business credit profile.
Once all of this information was given, we were able to successfully calculate and qualify our client to get his investment firm refinanced and cashed out.
Without getting both his personal and business finance records, there would be no way we could have accurately computed his GDSCR and gotten him qualified to refinance.
With the help of Wallace Capital Funding, LLC, we can make sure both your business and person credit profiles are in tip-top shape before applying for loans. Work with our experts today to get the process started.
The GDSCR, getting financed and more will be discussed during a webinar presentation hosted by Wallace Capital Funding LLC’s Managing Director Dominick Wallace. Join WCF’s mailing list, which can be found on our website, to get invited and learn more.
For all of your business financing needs, Wallace Capital Funding, LLC can help. Whether you need funding for new equipment, financing commercial real estate, or to cover staff expenses before your contract payment comes through, Wallace Capital Funding, LLC can create a custom funding solution that’s right for you.