This initial test compares cash available for debt service with fixed monthly repayments on vendor finance and commercial borrowing. It is designed to expose a potential funding shortfall—not to replace a lender-ready financial model.
Enter the proposed deal
Figures are illustrative and can be changed.
Business and valuation
Funding structure
Invoice discounting assumptions
The advance is assumed to remain outstanding throughout the five-year period; no principal repayment is modelled.
Indicative test: PASS
The lowest annual DSCR meets the 1.25x target under these assumptions.
Debt terms and target
Annual repayment capacity
| Year | Cash | Max allowed repayments | Repayments | Headroom to target | DSCR |
|---|---|---|---|---|---|
| Year 1 | £500,000 | £400,000 | £394,197 | £5,803 | 1.27x |
| Year 2 | £500,000 | £400,000 | £394,197 | £5,803 | 1.27x |
| Year 3 | £500,000 | £400,000 | £394,197 | £5,803 | 1.27x |
| Year 4 | £500,000 | £400,000 | £394,197 | £5,803 | 1.27x |
| Year 5 | £500,000 | £400,000 | £144,197 | £255,803 | 3.47x |
Cash Available, Max Allowed, and Actual Repayments
How the acquisition finance calculator works
The calculator tests whether the proposed funding sources cover the indicated enterprise value and whether estimated cash available for debt service can support the combined annual repayments. It is an initial structuring tool, not a substitute for transaction-specific financial modelling.
How to interpret the result
- Funding balance: purchaser equity, vendor finance and commercial borrowing should equal the indicated enterprise value.
- Lowest annual DSCR: the weakest year is compared with your selected minimum target.
- Downside DSCR: shows the result if estimated CFADS is 10% lower, before allowing for any further deterioration or exceptional costs.
Using the current inputs, £500,000 of maintainable EBITDA at a 3.5x multiple implies an enterprise value of £1,750,000. Funding comprises £125,000 of purchaser equity, £1,000,000 of vendor finance, £475,000 of commercial borrowing and £150,000 of invoice discounting. Estimated CFADS of £500,000 and peak annual finance payments of £394,197 produce a lowest DSCR of 1.27x. The structure meets the selected 1.25x minimum DSCR under these assumptions.
For accountants, brokers and acquisition advisers
You are welcome to share this free calculator with clients during preliminary acquisition and funding discussions, or reference it in relevant educational content. Every transaction still requires appropriate financial, legal, tax and credit advice.
Turn the initial test into a lender-ready model.
We build acquisition models that establish how much the business can borrow, how the debt will be repaid and where the risks sit.
Book a Free ConsultationThis calculator provides an illustrative initial assessment only. It is not financial advice, a valuation, a credit decision or an offer of funding. Obtain appropriate legal, tax, accounting and financial advice before entering into a transaction.