How Does Existing Business Loans Affect Future Borrowing

Author

Ryan Chen
March 03, 2025

Hi there,

Welcome to Loancater’s weekly newsletter. This is approximately a 4-minute read.

In today's newsletter, we’re going to go over how to determine if a business loan will affect your future ability to borrow.


We are going to go over…

  1. Key parameters 

  2. How to read debt service

  3. What the collateral of the deal is

Schedule a FREE strategy session with us here (link) or apply here (link) for a business loan.

Actionable Tips

Different types of loans are underwritten with different criteria in mind.

There’s always a variable that’s more universally used (like your credit score) than other parameters.

The next time you take out a loan, ask him how you are legally obligated to the loan to determine where the source of the liability will be (i.e., your credit score, your accounts receivables, CRE, etc.).

👁 Credit Report Course Here

Check out this free credit repair guide that’s better than most $500 companies (link)

💰 Loancater’s Application

Get the best business loan in the market here (link)

✔ Clients Who Worked With Us In The Past

See previous business owners who were happy to work with Loancater (link)

⭐ Different Types Of Loans

Type of funding product available in the market (link)

Key Parameters

The most important thing to understand is what the debt is encumbering(the collateral, whether it's your cashflow, credit, or real estate), and what the financials the deal is being underwritten on. For example, if you take a MCA(Merchant Cash Advance), which is underwritten by your cashflow, and the next deal you're looking to get approved for is a DSCR CRE deal, the lender won’t care that you are servicing a MCA. These deals look at different financials where the MCA looks at your business MRR over the last 3 months and the CRE just wants to know that the building is generating 1.25x the payment needed.

How To Read Debt Service

Debt service is simply - it’s monthly income / the monthly debt service. For example, you make 175k in net income per month and you have to pay 100k in debt payment, that DSCR is 1.75x.

What The Collateral Of The Deal Is

The collateral of the deal is even if it is “unsecured” always should be a key factor you keep in mind. MCA lenders are unsecured, but they tie up your receivables, and that means that any cashflow-based lender will help to underwrite the deal behind your exiting debt service. The same goes for credit cards. Your credit score is used, and as usage goes up, future underwriting must be priced behind it. 

How I Can Help You

If you like this newsletter and want to work with me, there are a few ways we can do so:

  1. You can apply for a business loan here (link)

  2. You can apply for credit repair by emailing [email protected] “I want credit repair”

  3. You can apply for a free 30 minute strategy session for credit card processing & ACH  here (link)

Or,  you can reply to this email.

I reply to absolutely everyone.