Debt Capacity

The most a borrower can borrow on the terms offered, set by whichever lender test binds first: a maximum multiple of EBITDA, a minimum interest cover at the loan’s rate, or the cash flow needed to repay a target share of the debt within its tenor. Lenders lend against the smallest of the three, and the gap between it and the debt proposed is the cushion.

Where Debt Capacity comes up

Real Estate Financial Modelling: Why Corporate Finance Mechanics Break HereThe Excel mechanics are the same. The economic logic is not, and that is what catches people.Read the guide — 13 min Project Finance Modelling: Cash Flow Waterfalls, DSCR Sizing and the Debt SculptNo corporate balance sheet stands behind the debt. The cash flow waterfall is the entire credit.Read the guide — 12 min How to Become an Investment Banker: Applications and Interviews, Start to OfferThe pillar guide to investment banking recruiting: which route is yours, what each stage filters on, and how to prepare for the stage you are at.Read the guide — 10 min

Keep reading

Credit and restructuring models

Related Credit terms

Fixed Charge Coverage Ratio (FCCR)EBITDA Cushion Maturity Wall Cash Sweep Loss Given Default (LGD)Second Lien

Go further than reading

The written material is free. These are the ways to get it applied to your own work.

CV Review by a Human

Written margin-note feedback on structure, impact bullets and ATS-readability. Reviewed by Suro, not an AI score.

$25 48h turnaround

Cover Letter Review by a Human

Line-by-line review of argument, tailoring and tone, with a rewritten opening as a worked example.

$50 48h turnaround

L3VLUP Pro

The subscription: personalised alerts, Apply Packs, every answer marked, full history and the whole research library.

$25 /month

Browse the full glossary — 329 finance recruiting and technical terms, in plain English.