Worked example Three loans asked for at once
Can a business take on three loans at once?
A made-up manufacturer with $4,150,000 in sales asks for a building, new machines and a line of credit at the same time. Here's how a lender would test all three together, with every figure worked out by LoanPrep's check.
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The business
A profitable manufacturer, and growing.
Example Precision Parts Inc. machines parts for other manufacturers and is owned by Taylor Example. Sales rose from $3,820,000 in 2024 to $4,150,000 in 2025. It pays $180,000 a year in rent, and owes on a machine loan and a truck loan.
| Cash flow | FY2024 | FY2025 |
|---|---|---|
| Profit on the tax return | $340,000 | $450,000 |
| Add back interest | $44,000 | $38,000 |
| Add back depreciation | $100,000 | $95,000 |
| Add back the owner's pay | $170,000 | $180,000 |
| Less cash paid out to the owner | -$170,000 | -$200,000 |
| The business's cash flow | $484,000 | $563,000 |
| The owner's side: what was paid out, less taxes and living costs | -$4,750 | -$13,900 |
| Cash flow available for loan payments | $479,250 | $549,100 |
The owner guarantees the loans, so a lender tests the business and the owner together. What the business paid out comes back to the owner, and the owner's income taxes and a share of income for living costs come out: 25% of the first $100,000 and 15% above that. How lenders figure cash flow
What it's asking for
Three requests, four loans.
The business wants to buy the $2,500,000 building it works in with an SBA 504, buy two CNC machining centers for $450,000 with a $400,000 equipment loan, and open a $500,000 line of credit. A 504 is two loans: a bank lends 50% of the price and a Certified Development Company (CDC) 40%, with 10% down. As a manufacturer, the business pays no SBA guaranty fee on the 504; the CDC's other fees are built into its loan.
| Loan | Amount | Estimated rate | Repaid over | A year |
|---|---|---|---|---|
| 504 bank loan | $1,276,250 | 8.75% | 25 years | $125,911 |
| 504 CDC loan | $1,024,000 | 6.97% | 25 years | $86,614 |
| Equipment loan | $403,500 | 9.25% | 7 years | $78,519 |
| Line of credit | $500,000 | 9.75% | Interest only | $48,750 |
Closing costs are added to the building and equipment loans. A lender tests a line of credit as if it's fully drawn, at interest only on the whole line. Rates are estimates from Prime on October 16, 2026, and the 504 rate for October 2026.
The owner brings $304,000 to closing: the $300,000 down on the building and the machines, and $4,000 of the line's closing costs. That leaves $376,000 of the owner's $680,000 in cash and investments. In all, the purchases, closing costs and fees come to $3,507,750, paid by the four loans and the owner's cash.
Debt coverage
Can it carry all three?
A lender divides the cash flow by every loan payment, old and new, the owner's home mortgage included, for the latest year and the one before. With the building, it also counts the $180,000 of rent the business stops paying, less the building's estimated taxes and insurance.
| Coverage | FY2024 | FY2025 |
|---|---|---|
| Payments today, a year | $166,200 | $166,200 |
| Coverage today | 2.88x | 3.30x |
| Plus rent no longer paid, less taxes and insurance | $130,000 | $130,000 |
| Payments with all three loans, a year | $505,994 | $505,994 |
| Coverage with all three | 1.20x | 1.34x |
| Before the CDC loan funds | 1.20x | 1.34x |
| After setting money aside for maintenance and repairs (MCAPEX) | 1.01x | 1.147x |
Until the CDC loan funds, the bank usually lends both parts of the 504, so coverage is tested that way too, and after MCAPEX the lower of the two is shown. MCAPEX here is the two years' depreciation divided by two, $97,500 a year.
The new loans take the payments from $166,200 to $505,994 a year. Each loan is held to its own minimum: SBA's 1.15x for the 504, and the 1.25x most banks want for their own equipment loans and lines of credit.
- Coverage of 1.20x in FY2024 is below the 1.25x minimum for the equipment loan and line of credit, though it meets SBA's 1.15x minimum for the SBA 504.
- After setting aside $97,500 a year for maintenance and repairs (MCAPEX), coverage of 1.147x in FY2025 is below the 1.25x minimum for the equipment loan and line of credit and SBA's 1.15x minimum for the SBA 504.
- After MCAPEX, coverage of 1.01x in FY2024 is below the 1.25x minimum for the equipment loan and line of credit and SBA's 1.15x minimum for the SBA 504.
- 3 open items a lender will ask about.
Which loans fit
The most the cash flow supports for each loan.
For each loan, the check works out the most both years support at that loan's minimum, before MCAPEX, with the other two counted at the amounts asked.
| Loan | Asked for | Most both years support |
|---|---|---|
| SBA 504 (the building's price) | $2,500,000 | $2,802,000 |
| Equipment loan | $400,000 | $307,000 |
| Line of credit | $500,000 | $309,000 |
The building fits, with room to spare at SBA's 1.15x. The equipment loan and the line of credit don't at the 1.25x a bank wants: in 2024, all three together come to 1.20x, before and after the CDC loan funds. So the owner has choices before applying: a larger down payment on the machines, a smaller line, an explanation of 2024 that a lender accepts, or waiting until the next year's return replaces 2024 in the two years a lender tests.
The result
Graded Close.
Cash flow covers the payments, but a year falls short of the usual minimum, coverage after maintenance and repairs is tight, or a lender will have questions. Cash flow covers the payments in both FY2024 and FY2025, also after MCAPEX, and the owners keep 6 months of payments or more after closing, so it isn't Not yet.
Strengths a lender will see
- Profit every year
- Sales trend: Up 9% in FY2025
- Current ratio, Dec 31, 2025: 3.15x
- Debt to net worth, Dec 31, 2025: 0.7x
What a lender would ask, and what the check tells the owner to do
- The December 31, 2025 balance sheet shows $40,000 of other current assets. Say in your notes what's in them.
- The latest balance sheet is dated December 31, 2025, 289 days ago. Upload this year's balance sheet and profit and loss statement, dated within the last 90 days.
- Coverage with the new loan is 1.20x in FY2024 and 1.34x in FY2025. Say in your notes what happened that year and why it won't happen again.
A loan calculator tests one payment.
A lender tests every payment, old and new, against two years of the business and its owners together, each loan at its own minimum. The check does the same with your returns.
Example Precision Parts Inc. and Taylor Example are made up, and so are their figures. Rates are as of October 16, 2026. LoanPrep isn't a lender, and each lender makes its own decision with its own policy.
Asking for more than one loan?
Add each one to your check, and see how a lender will test them together before you apply.
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