A debt schedule lists every obligation the business owes, one line each: creditor, original amount, current balance, rate, payment, maturity, collateral, guarantor, prepayment terms and status. In a refinance it decides the size of the new loan, which debts are paid off and which survive, and the payments the coverage test runs on. It has to tie to the balance sheet at the same date, and it has to include what the balance sheet often misses: cash advances, equipment leases, owner loans and credit cards.
- What it is
- One line per obligation, as of a stated date
- Columns lenders expect
- Creditor, original amount, balance, rate, payment, maturity, collateral, guarantor, prepayment, status
- The test it must pass
- Its total ties to the debt on the balance sheet at the same date
- Most often missing
- Cash advances, equipment leases, owner loans, credit cards, tax installment plans
- What it drives
- Payoff amounts, surviving debt service and the coverage test
Why a refinance starts with this document
A new lender in a refinance is buying out other lenders. Before it can say how large its loan should be, it needs to know exactly what is being bought out, what will remain, and what the business will pay each year once the refinance closes. The debt schedule answers all three. That is why it is often the first document a credit officer opens, before the P&L.
It drives the sizing directly:
- The payoff side. Every debt marked for refinance, at its balance, becomes a use of the new loan's proceeds. At closing the balance is replaced by a figure from a payoff letter, but the schedule is where the estimate starts.
- The surviving side. Debts that are not being refinanced keep their payments, and those payments sit beside the new loan's payment in the debt service coverage test.
- The eligibility side. On an SBA refinance, the schedule is where the lender checks that each debt was current for the last 12 months and that the new payment is at least 10% lower than the payments it replaces. See refinancing existing debt with a 7(a).
- The lien side. The collateral column tells the lender which liens have to be released for it to take the position it requires, and which creditors it will share collateral with afterward.
An error on the schedule is an error in all four. A missing debt means an understated payoff, an overstated coverage ratio and a lien nobody planned to release.
The columns a lender expects
| Column | What to enter | Why the lender needs it |
|---|---|---|
| Creditor | The legal name of the lender, lessor, funder or person owed | To match the debt to its note, its UCC filing and its payoff letter |
| Original amount and date | What was borrowed and when | Shows how far the debt has amortized, and supports seasoning and payment-history tests |
| Current balance | Principal owed at the schedule's date, from the latest statement | The payoff estimate and the tie to the balance sheet |
| Rate | Fixed or variable, and the index and margin if variable | Tests how the payment moves, and whether the refinance saves anything |
| Payment | Amount and frequency: monthly, weekly, daily | Debt service for the coverage test |
| Maturity | Final payment date, and any balloon | Identifies near-term refinancing risk |
| Collateral | What secures it: all assets, specific equipment, real estate, receivables | Lien position, and what must be released at closing |
| Guarantor | Who has personally guaranteed it | Personal liability that follows the owners; guarantees the refinance may release |
| Prepayment terms | Any penalty, step-down or yield maintenance | The true cost of paying it off now |
| Status | Current, past due, in forbearance, in default; refinance or keep | Eligibility, and which side of the sizing each debt falls on |
Two columns cause the most trouble. Payment should be stated at its real frequency, not converted: a cash advance that debits every business day should say so, and the lender will annualize it. Prepayment terms are often left blank because the owner has never read that part of the note; a penalty discovered after the term sheet is signed comes straight out of the refinance's benefit. See how prepayment penalties work.
Tying the schedule to the balance sheet
The single most important check is that the schedule and the balance sheet say the same thing. Lenders test it by adding up the schedule and comparing it with every debt line on the balance sheet at the same date. If the totals differ, one of the documents is wrong, and until someone explains the difference the lender cannot trust either.
| Debt schedule | Balance sheet | Difference and why | |
|---|---|---|---|
| Bank term loan | 820 | 820 (current and long-term portions together) | None |
| Line of credit | 300 | 300 | None |
| Equipment notes | 260 | 260 | None |
| Equipment finance agreement booked as a lease | 140 | Not shown | Booked as rent expense; belongs on the schedule and, often, the balance sheet |
| Loan from the owner | 200 | Buried in other liabilities | Reclassified; the lender needs to know it is there and whether it is being repaid |
| Cash advance | 180 | Not shown | Recorded only as payments; must be added |
| Total | 1,900 | 1,380 | 520 explained line by line |
A difference is not a problem. An unexplained difference is. The reconciliation above tells the lender the schedule is complete and the balance sheet is incomplete in ways the owner understands, which is far better than two documents that happen to agree because both leave out the same debts.
Date matters too. The schedule should be dated to the same month-end as the balance sheet it ties to, and updated to a later date only alongside a later balance sheet. A schedule dated today beside a balance sheet from year-end will not tie, and the lender will spend time finding out why.
The debts owners leave off
Almost every incomplete schedule is incomplete in the same places. These are the obligations that do not look like bank loans, so owners do not think of them as debt:
- Merchant cash advances. Often recorded only as payments, or not at all. The lender will find them on the bank statements; leaving them off makes the rest of the schedule suspect. See how lenders read cash advance history.
- Equipment leases and financing agreements. A lease with a nominal buyout is debt in substance. Even a true rental commitment is a fixed charge the lender will count. See equipment lease vs loan.
- Loans from owners and related parties. They may be subordinated or forgiven in the refinance, but they must be shown. See how lenders treat owner loans.
- Business credit cards. Balances carried month to month are debt, and on an SBA refinance they may be refinanceable.
- Seller notes from an earlier acquisition, with their subordination or standby terms. See refinancing seller notes.
- Tax installment agreements. A payment plan with a taxing authority can carry a lien that ranks ahead of the new lender, and the lender must know about it. See business loans with a tax lien.
- Vehicle loans in the business's name, and loans in an owner's name that the business pays.
- Guarantees the business has given for an affiliate's debt, listed separately as contingent obligations.
If the business makes a regular payment on it, or someone could call it, it belongs on the schedule.
From schedule to refinance plan
Once the schedule is complete, add one more column: refinance or keep. That turns a list into a plan, and it is how a lender reads the file.
- Refinance the expensive, short and awkward debts: cash advances, short amortizations, balloons coming due, variable-rate debt the business would rather fix.
- Keep the debts that are cheap, long and well matched to their assets, unless the new lender requires their collateral.
- Resolve owner loans and related-party debt: subordinate them to the new lender, convert them to equity, or explain their repayment.
- Check each debt marked for refinance against its prepayment terms and, on an SBA loan, its eligibility.
The totals then give the lender what it needs in one view: the sum to be paid off, the debt service that survives, and the new loan's payment. Earnings against that total is the coverage test; SBA requires at least 1.15x, and conventional bank lenders commonly look for at least 1.25x. Whether the whole exercise pays for itself is a separate question, covered in the refinance break-even.
How Transparent handles the schedule
The debt schedule is on every one of Transparent's lender checklists, and for an SBA refinance it comes with copies of the notes being refinanced. Many owners do not have one. When that happens, Transparent builds it from the documents already on file — the balance sheet, the notes and the bank statements — and the owner confirms each line before anything goes to a lender. The reconciliation to the balance sheet is done at the same time, so the gaps above are found before a credit officer finds them.
Once the documents are in, Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day, and the schedule feeds the model's sources and uses and its coverage tests directly. Transparent charges nothing before a loan closes. See the package.
Common questions
- Is a debt schedule the same as the notes payable on my balance sheet?
- No. The balance sheet gives totals; the schedule gives each obligation's terms. And the balance sheet often misses debts the schedule must include, such as cash advances, some leases and owner loans. The two should reconcile, with any difference explained.
- Should I include my line of credit if the balance is zero?
- Yes. Show the limit, the zero balance, the collateral and the maturity. An undrawn line still carries a lien and may need to be released or kept in the refinance.
- Do operating leases belong on the schedule?
- List them, separately from debt. A lender counts the payments as fixed charges even when they are not debt, and a lease with a nominal buyout is usually treated as debt.
- How current does the schedule need to be?
- Dated to the same month-end as the balance sheet it ties to, and refreshed with payoff letters before closing. A schedule that ties to an old balance sheet is more useful than a current one that ties to nothing.
- What if I do not know the prepayment terms on a loan?
- Read the note, or ask the lender for a payoff quote that shows any premium. A prepayment cost found after a term sheet is signed comes out of the refinance's savings.