I finally saw how my loan covenants were killing my cash flow

I was looking at my books for a small retail strip in Tampa and realized the debt service coverage ratio covenant on my loan was forcing me to keep way too much cash in the business, leaving nothing for repairs. The bank's quarterly review letter pointed out I was barely hitting 1.25x, which meant I couldn't pull any money out. How do you guys handle renegotiating these ratios when a property's income dips?

2 comments

2 Comments

derek_coleman2d ago

Isn't that just how the loan is supposed to work?

barbara_hall92d ago

You'd think so, right? But they hide fees in the fine print!