Debt capacity is the amount of debt a health center can afford to take on, given its historical or projected financial position. To get a preliminary estimate of debt capacity and better understand the "gap" that may need to be funded through equity contributions and/or a capital campaign in order to complete a capital project, health centers can access our Debt Capacity Calculator.

Using your most recent year's audited financial information and current expectations regarding interest rate (usually between 5% and 7%) and the desired length of the  loan (amortization); enter the information as indicated below. For "Rent Rebate," enter the annual rent amount you will save (if any) once your new facility is built.

 
Total Funds Available for Debt Service
Funds Available for Debt Service After Applying Debt Service Coverage Requirement of 1.25
Amount of Debt Your Center Can Support

This estimate, which includes your health center's existing debt, is based on your historical financial performance, and as such, provides a starting place to consider your possible future debt capacity. To the extent you expect your operations to change as a result of your capital project, you should also prepare multi-year detailed financial projections for your health center, and then run the same calculation to determine the feasible level of debt your projected operations can carry. Capital Link can help you prepare these projections and assist you in determining an optimal financing mix for your project.

 

For more information about the services detailed above, contact us.

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