Free workbook

The bank knows your number.
Know it first.

A lender runs two tests and lends against the lower: total debt capped at a multiple of EBITDA, and debt service capped at what cash flow carries with a cushion. This workbook runs both, names which one binds you, and shows what a 200 basis point rate move takes off the number.

What's inside

  • The leverage test and the coverage test computed side by side from six business inputs and four lender constraints
  • The binding constraint named in plain words, because it tells you which conversation to prepare for
  • Incremental capacity in dollars: in the example book, $5.3M, bound by coverage, not leverage
  • A rate-shock line: the same capacity at +200 basis points, and the dollars the move erases
  • The Deal Box: at each purchase multiple, the total need, the debt the deal can carry, the equity check, and a YES or NO verdict; the example box closes past 4.5x

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How to use it

  1. Use lender-credible EBITDA, after the add-back scrub, not the number you wish were true. Banks haircut first and negotiate second.
  2. Read the binding constraint. Coverage binding means EBITDA quality and rate matter most; leverage binding means the multiple conversation.
  3. Check the rate-shock line before committing capacity. If 200 basis points breaks the plan, the plan was already broken.
  4. In the Deal Box, find the last YES row. Past it, the fix is more equity, seller paper, or a better price, not optimism.

Capacity is arithmetic, not a commitment: the file that turns it into an approval is the Lender Package Builder, the covenant math after closing is the Covenant Headroom Tracker, and the first 100 days after a deal is the Integration Runbook. If capacity and the growth plan do not fit, start a conversation.