Glossary
Debt capacity
The commercial version of borrowing capacity: how much total debt the business's cash flows can support across every facility it carries.
In plain English
Debt capacity is the total debt load a business can support from its cash flows, across every facility: the term loan, the equipment finance, the overdraft, the lot. Where borrowing capacity usually describes the next loan, debt capacity describes the whole position.
Measuring it properly means consolidating everything the business and its related entities already owe, then testing what remains at the assessment rate. Skipping the consolidation step is how businesses end up over-geared one facility at a time, each one approved in isolation.
Why a lender cares
The first thing a commercial assessor builds is the complete debt schedule, including the facilities you forgot to mention, because they will find them anyway. A file that arrives with the full position consolidated and tested reads as a borrower in control. That consolidation is the core of our Debt Capacity Assessment.
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