Existing monthly debt payments
What it means
Add up what you pay every month on debts the business already has: business loans, equipment financing, lines of credit and business credit cards.
Leave out the new loan you're asking for. We work that payment out for you.
Why lenders ask
A lender needs to know the business can handle its old payments and the new one together.
Debt service: the question behind the question
Lenders call the total of your loan payments "debt service". The core test in almost every small business loan is whether the cash the business generates covers its debt service with room to spare. Bankers often express this as a debt service coverage ratio: cash available for payments divided by the payments themselves.
Room to spare matters because sales dip, costs rise and customers pay late. A business that only just covers its payments in a normal month has no cushion when something goes wrong, and a lender knows it.
What to count
Count the actual monthly payment on each debt, including principal and interest. For a line of credit or credit card, use what you really pay each month on average, not the minimum if you usually pay more. Lease payments on equipment or vehicles count too.
If you personally guarantee a debt for the business, the lender will usually see it on your credit report anyway, so it's better to include it here than to have it come up later.