Global cash flow

Definition

A lender's review of the business's cash flow and your household's, together.

Why It Matters

A deal that covers its own debt comfortably can still be declined because your side of the ledger fails, which is the decline first-time buyers least expect. The fix is on your side too: document a spouse's income, pay down a car loan or a credit line, and clear up anything on your credit report before applying rather than arguing the business's numbers harder. Ask a lender early what they include, since student loans and a mortgage are treated differently from bank to bank.

In numbers: A business covering its $300k of debt at a healthy 1.4x can still be declined if the buyer's household adds $90k of income against $70k of mortgage, car, and living costs; the lender tests both sides together, not the business alone.