How much credit can the asset carry? An income property, a solar system or a business
This SBC calculator estimates how much credit an income property, a solar system or a business can carry from its cash flow: annual income less operating expenses, divided by the debt service coverage ratio (default 1.25), at the rate and term you enter, with a rate sensitivity chart. The result is an indication only; the decision is the lender’s.
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An indication only, not an offer and not a commitment. Actual terms are set by the lender, based on the full file.
Rent, electricity sales or the business’s income, per year.
Maintenance, insurance, management, municipal tax and other running costs, without debt payments.
An assumption to test, not a rate we offer.
How many shekels of net cash flow for each shekel of payments. 1.25 is a starting point; each lender sets its own threshold.
The result
- Credit the asset carries
- ₪3,792,112
- Net cash flow per year
- ₪480,000
- Maximum yearly payment
- ₪384,000Monthly payment: ₪32,000
Net cash flow per year: ₪480,000. Maximum yearly payment: ₪384,000. Credit the asset carries: ₪3,792,112.
Income less expenses is the net cash flow. Divided by 1.25 it is the maximum yearly payment, which at your rate and term becomes a credit amount. Whether to lend, how much and on what terms is the lender’s decision.
4%: ₪4,326,149, 5%: ₪4,046,568, 6%: ₪3,792,112, 7%: ₪3,560,191, 8%: ₪3,348,499.
How the calculator works
Annual income less operating expenses (as a percentage of income or in shekels) is the net operating income. Net operating income divided by the DSCR is the maximum annual debt service, and that payment, month by month, is turned into a credit amount on a Spitzer schedule at the rate and term you enter. The monthly rate is the annual rate divided by 12, as Israeli banks quote it.
The chart shows the same calculation at rates around the one you entered, to see how sensitive the amount is to the rate. Figures are rounded only for display. It leaves out CPI linkage, fees, required equity, the value of the asset and collateral, which a lender also checks.
The monthly rate is the annual rate divided by 12, as Israeli banks quote a loan. Numbers are rounded only on screen, never in the middle of the calculation.
Questions and answers
What is a debt service coverage ratio (DSCR)?
The ratio between the net cash flow of the asset or business and its yearly debt payments. A ratio of 1.25 means that for every shekel of debt payment there is ₪1.25 of net cash flow. Each lender sets its own threshold, by the asset, the business and the deal.
What goes into operating expenses?
The running costs needed for the asset or business to keep earning: maintenance, insurance, management, municipal tax, and in a solar system also cleaning, monitoring and inverter replacement. Debt payments are not included, because the calculator works them out.
Is this the amount a lender will approve?
No. It is an indication only, not an offer and not a commitment. A lender also checks the value of the asset, the equity, the collateral and the borrower, and the decision whether to finance, how much and on what terms is the lender’s.
Why does the amount change so much with the rate?
Because the same yearly payment carries less principal when the rate is higher, and over a long term the effect is larger. The chart shows the amount at rates around the one you entered.