How do lenders view a septic service with steady maintenance contracts?

Recurring work gives a lender something to measure. They will ask for the contracts, the renewal history and the invoices, and compare them against bank deposits. A contract the customer can cancel on short notice looks different from one with a set term, and a lender will want to know which kind you have.

Customer mix is next. If a few large accounts supply most of the maintenance income, the lender will ask what happens if one leaves. A spread of many small customers may look steadier, though collecting from many small accounts has its own cost. Be ready to show who the customers are, by type and by size, without naming those that are confidential.

Finally, a lender looks at coverage. They will compare the cash left after running costs with the payments the new loan would add. Your accountant can prepare the numbers and explain the ratio the lender is likely to use. Bring equipment condition, truck age and replacement plans too, because worn trucks can swallow cash that contracts promise. A lender may also want to know how you would cope if a key truck failed or a main driver left. A short written contingency plan shows that steady income is backed by sound operations.

Key takeaways

• Gather contracts, renewal history and matching deposits.
• Show how concentrated the maintenance income is among customers.
• Ask your accountant to prepare the repayment coverage calculation.