Sep 24

Avoiding Costly Mistakes in Calculating Debt Service Coverage

Registration Options & Pricing

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Recorded Webinar Includes

  • Recording of the Live Webinar
  • Can be viewed anytime 24/7, beginning 2 business days after the webinar
  • Handout and Take-Away Toolkit
  • Available on Desktop, Mobile & Tablet
  • Free Digital Download, yours to keep
  • Share link with anyone at your bank
  • Presenter’s contact info for follow-up

12:00 pm – 1:30 pm PT
1:00 pm – 2:30 pm MT
2:00 pm – 3:30 pm CT
3:00 pm – 4:30 pm ET

Inadvertent errors in calculating debt service coverage can be costly. It is critical to accurately determine a borrower’s ability to repay, especially with today’s unstable economy. Discover how to avoid mistakes while learning more about making accurate determinations and prudent decisions.


  • Identify potential vulnerabilities which could lead to inaccurate assessment of borrower repayment ability (debt service coverage)
  • Discuss common errors in the calculation of global debt service coverage which could lead to overstated secondary repayment ability
  • Distinguish between different repayment ability calculations and when each is most appropriate, including traditional EBITDA coverage, free cash flow, and uniform credit analysis
  • Recommend the level of financial statement assurances which will lead to the most confident lending decision, given loan amount, transaction, and borrower complexity
  • Understand common weaknesses in the institution’s development of repayment ability as found through third-party, independent loan reviews


The traditional five Cs of credit serve as the foundation for the assessment of credit risk inherent in loan origination and ongoing monitoring of the institution’s loan portfolio. Of the five Cs, capacity is often the most important factor in credit risk assessment. As part of safe and sound banking practices it is incumbent for an institution to provide for consideration, prior to credit commitment, of the borrower’s overall financial condition and resources, the financial responsibility of any guarantor, the nature and value of any underlying collateral, and the borrower’s character and willingness to repay as agreed (Appendix A to Part 364-Interagency Guidelines Establishing Standards for Safety and Soundness).

For this reason, accurately determining a borrower’s ability to repay is critical, especially in times of economic instability. This presentation will focus on the factors which could lead to inadvertent errors in the calculation of debt coverage, which could prove to be costly in the credit relationship if the institution incurs loss. Losses and potential erosion of capital are of greatest concern; however, institutions must consider the negative impact erroneous credit decisions (caused by underwriting errors) may have on the borrowing entity and its ownership. Prudent decisions based on accurate determinations protect the institution and the interests of borrowers and related entities.

Attendance certificate provided to self-report CE credits.


This presentation will provide insight regarding common errors and mistakes in the determination of repayment capacity (debt service coverage). Personnel responsible for determining debt service coverage, interpreting debt service coverage, and approving credits based on the determination will benefit from this presentation.


  • Employee training log
  • Interactive quiz


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NOTE:  All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your financial institution is prohibited. Print materials may be copied for eligible participants only.


Young & Associates, Inc.
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