The combined cash flow of a borrower, its owners and their other businesses, set against all of the debt payments those same parties owe.
Global cash flow looks past the one property or business being financed to everyone standing behind the loan. The OCC’s handbook for examiners says cash flows should be assessed on a global basis, and that the work can mean combining business financial statements, tax returns and Schedule K-1 forms from several partnerships, companies and corporations. It counts required and discretionary cash flows from all activities, any actual or contingent liabilities, and realistic figures for personal debt payments, taxes and living expenses.
Example: a business earns $200,000 of cash flow and its owner has $60,000 of other income after taxes and living costs, for $260,000. Business loan payments are $130,000 and the owner’s other debt payments are $70,000, for $200,000. Global coverage is 1.30.
The handbook adds that this analysis should be done even when a guarantor holds large liquid assets, since those assets may be needed elsewhere. SBA publishes a floor: a standard 7(a) loan needs coverage of 1 to 1 on a global basis, on top of 1.15 on the business’s own cash flow. Other lenders set their own.
How it shows up in the data here
Not in any public file. No filing here carries a borrower's or guarantor's finances, so no lender page shows a global ratio. The DSCR calculator runs coverage on the loan alone; add your other debt payments to see the global figure, and put the result in the deal summary builder.
Go further
- DSCR calculator: Coverage on one loan, the starting point for the global figure.
- Deal summary builder: A one-page summary a lender can read, with your coverage on it.
- DSCR calculator: Cash flow over debt service. Type the cash flow and the loan terms, see the ratio and the cushion before it falls to 1.00x.
- Deal summary builder: Turn the facts of a deal into a clean one-page summary you can copy or print. Nothing is saved or sent.
- Global cash flow, explained step by step: A property can cover its loan while the people behind it cannot cover their other debts. Global cash flow is the test that looks at all of it at once.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
- Guarantor strength and recourse, explained: A guaranty is the lender's second way out. Whether you sign one, how much it covers and what the lender checks before accepting it shape a commercial loan as much as the rate does.
Related terms
- Debt service coverage ratio (DSCR): Net operating income, or business cash flow, divided by the loan payments due in a year. It shows how many dollars come in for each dollar of debt service.
- Guarantor: A person or company that promises to repay a loan if the borrower does not. On a loan to an LLC or corporation, the guarantor is usually an owner.
- Personal guaranty: A signed promise by an individual, usually an owner, to repay a business or real estate loan personally if the borrowing company does not.
- Contingent liability: A debt a person or company would owe only if something happens, most often a guaranty of someone else's loan that the borrower then stops paying.
- Debt schedule: A table of every loan a business or borrower owes, showing for each the lender, balance, payment, maturity date and collateral.
- EBITDA: Earnings before interest, taxes, depreciation and amortization: a business's operating profit before financing costs, income taxes and non-cash charges.
- Post-closing liquidity: The cash and other liquid assets a borrower or guarantor still holds after paying the down payment and closing costs on a loan.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.