Bank credit sized to how your business actually earns.
Term loans and working capital lines from banks are still the lowest cost capital most established businesses can get. We size what your cash flow supports, structure the terms, and place it with the bank that fits.
Your business has changed. Your bank structure has not.
Most bank facilities are set once and renewed for years. That works until growth, a maturity or a covenant forces the question.
Your line has not kept up
Growth, a new location or a bigger customer has outrun a facility that was sized years ago.
A maturity or renewal is coming
Renewal is the moment to renegotiate pricing, covenants and guarantees, not just sign the extension.
Covenants are getting tight
A leverage or coverage test close to its limit restricts how you run the business. A better structure gives you room.
Short term debt is funding long term needs
Equipment, a buyout or expensive short term borrowing can be refinanced into payments sized to cash flow.
Banks lend against cash flow first.
A conventional commercial loan is underwritten mainly on your earnings and ability to repay, then on collateral and guarantees.
Cash flow
The bank starts with EBITDA and existing debt payments to see how much new debt service the business can carry.
Coverage
Most banks want cash flow to cover total debt payments with a margin, commonly around 1.25 times.
Structure
Term, amortization, collateral, guarantees and covenants are set to match the purpose of the loan.
Ongoing tests
Covenants are tested on your financial statements, usually quarterly or annually.
The right bank product depends on what the money is for.
| Bank term loan | Bank revolving line | Asset based line | |
|---|---|---|---|
| Best used for | Equipment, acquisitions, buyouts and refinancing | Seasonal swings and short term working capital | Working capital that grows with receivables |
| What sets the size | Cash flow and coverage | Cash flow, sometimes a borrowing base | Eligible receivables and inventory |
| Repayment | Amortizes over a set term | Drawn and repaid, renewed periodically | Collections pay it down, then redraw |
| Covenants | Coverage and leverage tests | Coverage and leverage tests | Often a single test that applies only if availability runs low |
| Relative cost | Lowest, when you qualify | Lowest, when you qualify | Moderate |
General characteristics only. Terms vary by lender, industry and borrower profile. See how an asset based line works.
How much new debt can your cash flow carry?
Banks want cash flow to cover all debt payments with room to spare. This estimate uses a 1.25 times coverage target, a common starting point.
Enter four numbers to see a rough range.
Illustrative estimate only. Not an offer or commitment to lend. Actual capacity depends on lender underwriting, collateral, guarantees and your full financial picture.
Built for established, profitable businesses.
Strong candidates
- Consistent profits over the last two to three years
- Timely financial statements, ideally reviewed or audited
- Cash flow that covers debt payments comfortably
- Real estate, equipment or receivables available as collateral
- Owners prepared to provide guarantees where required
Usually a harder fit
- Recent losses or sharply declining earnings
- Late or unreliable financial statements
- Heavy existing leverage
- Industries a particular bank avoids, which varies by bank
- Needs that grow faster than earnings, where an asset based line often fits better
Most of the work happens before a lender sees the deal.
We handle the preparation that decides your terms, and stay in it through closing.
Analyze
We rebuild the cash flow picture a bank will see, including which adjustments a lender will and will not accept.
Qualify
We find what will raise questions, from customer concentration to guarantees, and address it before submission.
Structure
Term, amortization, covenants and collateral matched to the purpose of the loan.
Execute
We take the request to banks that lend in your industry and size, compare term sheets, and manage it to closing.
Illustrative scenario. Not a specific client or transaction.
A manufacturer with about $18M in revenue and $2.4M in EBITDA kept drawing its short term line to buy equipment. The line sat near its limit, and every renewal came with harder questions from the bank.
Split into a seven year equipment term loan and a smaller working capital line, the same debt matched how each dollar was used. Payments became predictable, and the line was free for working capital again.
What owners ask us first.
What coverage ratio do banks look for?
Many banks look for cash flow that covers total debt payments by about 1.25 times or more. Requirements vary by bank, industry and loan type, and banks measure cash flow in slightly different ways.
Will I need a personal guarantee?
Often, yes, for privately held businesses. The scope of a guarantee can sometimes be negotiated, and it is one of the terms we work on.
How long does a bank loan take to close?
From a complete package, many conventional loans close in roughly 30 to 60 days. Appraisals and environmental reports on real estate can add time.
Should I renegotiate with my current bank or move?
Sometimes the best result is a better structured version of the relationship you already have. We compare it against what other banks would offer before recommending a move.
What if my bank says no?
A decline usually has a specific cause, such as coverage, leverage, collateral, customer concentration or industry. We find the cause and match the request to a lender or structure that fits, which may be a different bank, an asset based line or an SBA loan.
How is Cobalt paid?
Advice is free. We are compensated when financing closes, and we disclose how before you commit to anything.
Tell us about your business.
A Managing Partner reviews every inquiry, usually within one business day. No credit pull and no obligation to start the conversation.
- If there is a fit, we will ask for recent financial statements and your current debt schedule.
- Your debt capacity estimate is included with your message.