Loan covenants are promises you make to the bank. These covenants may include a debt service ratio and some kind of ‘leverage ratio’, such as debt to net worth.
The first step is to understand what the covenants are and how to calculate them. Next, make sure that you can hit the financial targets that are required.
The one thing you must know about loan covenants: It’s best not to break them.
In the Short Course: How to Finance your Craft Brewery, we dig into the details of loan covenants and bank ratios. We’ll walk through where to find the covenants in your loan documents, how to work with your lender to ensure proper ratios are set, and how to calculate the numbers with your monthly financial reporting packet.
How to Finance your Craft Brewery: Course Contents:
- Brewery Financing Basics: Loan Terms, Loan Types, Typical Loan Structures
- Working with Lenders: How they evaluate breweries, What they need from you, How to make the most of the relationship
- Loan Covenants + Calculations: Debt Service, Leverage…add how to add these to your financial reporting
- Loan schedule spreadsheet: How to Map out what you owe, monthly obligations
- Private Money, Investors, Outside capital: Friendly debt, What’s it worth…
- Start-Up, Growth, Mature Breweries: Effect of Debt on Brewery Financials
For a sample of the course content, check out the short video below.
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