Analyze how loan payments will impact your franchise cash flow, profitability, and debt-to-income ratios. Make informed decisions about loan amounts and terms that fit your business model.
Gross monthly revenue before expenses
Include rent, payroll, utilities, supplies, owner salary
Monthly payment for the new loan
Existing loan payments, credit cards, etc.
How much does revenue drop in your slowest months?
Connect with franchise financial experts who can help you structure loans to optimize cash flow and minimize risk. Get personalized advice for your specific situation.
Cash flow analysis helps you understand:
Important ratios to monitor:
Be cautious if your analysis shows:
Most lenders prefer to see total debt payments (including the new loan) under 40% of gross revenue. Conservative franchise owners aim for 25-30% to maintain flexibility for unexpected expenses or seasonal downturns. Service-based franchises can often handle higher ratios than retail or food service.
Input your lowest expected monthly revenue to stress-test your cash flow. Many franchises see 20-30% revenue swings seasonally. Ensure you can cover loan payments even in your slowest months, or maintain a cash reserve equal to 3-6 months of operating expenses.
Yes, include a reasonable owner salary in your operating expenses. Many franchise owners make the mistake of not paying themselves, which creates unsustainable cash flow projections. Include at least $4,000-8,000 monthly for owner compensation depending on your market and franchise type.
Consider these options: reduce the loan amount, extend the loan term to lower payments, improve your business operations to increase cash flow, or wait until your business is more profitable. It's better to be conservative than risk business failure due to excessive debt payments.