What is debt service coverage ratio and why do lenders care about it?

Debt service coverage ratio measures the cash flow available to cover loan payments divided by the total loan payments due, and lenders use it as a primary indicator of repayment risk. Most loan agreements set a minimum threshold, commonly around 1.25, that must be maintained throughout the loan term.

What happens if we breach a loan covenant?

A covenant breach gives the lender the contractual right to call the loan due, raise the interest rate, require additional collateral, or restrict further borrowing, though many lenders will negotiate a waiver if approached proactively before the breach becomes public in a compliance certificate. Early notice and a credible plan to correct the issue significantly improve the outcome.

How far in advance should we prepare financials before seeking investment?

We recommend starting cleanup and forecast preparation at least three to six months before actively raising capital, since resolving accounting inconsistencies and building a credible model both take time. Starting early also means the financials are ready if an opportunity comes together faster than expected.

Can you attend meetings with our lender or investors directly?

Yes, we regularly join lender and investor meetings alongside ownership to answer detailed financial questions and add credibility to the numbers being presented. Having a CPA in the room often shortens the diligence process because technical questions get answered on the spot.

CFO Services

Lender and Investor Support Services

Financials that hold up when a bank underwrites your next van loan or a buyer starts digging into the business before you sell it.

Built for HVAC, plumbing, electrical, and mechanical contractors running trucks, techs, and service agreements out of QuickBooks Online, ServiceTitan, and Housecall Pro.

Schedule Your Free Strategy Call (559) 203-3450

What sends contractors looking for this

We financed a van or a shop building and aren't sure we're meeting the loan terms

Equipment and vehicle loans, along with any real estate financing for a shop, often carry covenants such as a minimum debt service coverage ratio or a cap on how much additional debt the business can take on. Those calculations are written into the loan agreement in a specific way that doesn't always match how the books are normally kept.

Without checking these numbers monthly against the loan agreement's exact language, a shop can slide out of compliance during a slow season without realizing it until the bank's own review flags it.

A covenant breach on an equipment or building loan gives the bank the right to call the loan due, raise the rate, or require additional collateral, and finding out at the same time as the bank leaves you with far less room to negotiate a fix.

We're getting ready to sell the business and our numbers won't hold up to a buyer's questions

A buyer evaluating a home services business will ask for two to three years of financials, job cost detail by crew, and an explanation of any add-backs like a personal vehicle or a family member on payroll. Shops that have run lean on bookkeeping often discover during early conversations that job cost data in ServiceTitan or Housecall Pro doesn't tie back to what QuickBooks shows.

Inconsistent job costing, unexplained owner add-backs, and no clean explanation of recurring service agreement revenue are the most common issues that surface, and each one gives a buyer room to renegotiate the price.

A buyer who finds sloppy financials typically responds by cutting the offer, demanding a longer earnout, or walking away, and a deal that falls apart over financial issues is hard to revive with the same buyer at the same price.

How we fix each of those

01
We track your equipment and building loan covenants every month
We calculate debt service coverage ratio and any other covenant tied to your equipment, van, or building loan exactly as the loan agreement defines it, check it monthly, and flag you well before a reporting deadline if a slow season is putting you at risk of breaching it.
02
We get your books buyer-ready before you list the business
We reconcile job cost data between ServiceTitan or Housecall Pro and QuickBooks, document owner add-backs with support a buyer can verify, and build a clean two-to-three year financial picture along with a forecast, so the numbers hold up the moment a buyer's accountant starts asking questions.

Everything included

Debt service coverage ratio and loan covenant tracking
Bank compliance package assembly for equipment and building loans
Job cost reconciliation between ServiceTitan or Housecall Pro and QuickBooks
Owner add-back documentation for a future sale
Buyer-ready financial package and forecast
Data room organization for sale due diligence
Direct support during bank or buyer meetings

Work that pairs with this

Fractional CFO

A part-time CFO for HVAC, plumbing, and electrical shops who tells you what a third crew, another van, or a competitor's customer list will actually do to your cash, without a six-figure salary.

View Fractional CFO

Cash Flow Forecasting

See the slow season coming three months before the bank account gets thin, so payroll and the truck payment are never a surprise.

View Cash Flow Forecasting

KPI Reporting

Close rate, average ticket, and cost per booked call by crew, pulled from ServiceTitan or Housecall Pro every month so you know how the business is really running.

View KPI Reporting

Contractors who have already done this

Real Google reviews from owners we work with, next to the engagements behind the numbers.

Google review
As a home services company, I feel that High Velocity Accounting has elevated our business to the next level. We are able to dig deeper into our numbers, report accurately and make adjustments where needed. They are very responsive, detail oriented and an extension of our team.
Cathleen Helin
Owner, Home Services
Clovis, CA
Case study
How a Construction Company Cleaned Up Two Years of Books and Financed New Equipment
Construction · $2.8M - $4.1M annual revenue
Books brought current
22 months
Equipment loan approved
$680,000
Read the full breakdown
Google review
I have been so genuinely pleased with High Velocity Accounting's services. I feel I have an extension of our team in Brett and his team. They always make time for my questions and look for strategic ways to build our businesses mutually. I rest easy knowing our books are kept in good order and our taxes are prepared professionally. I never hesitate to recommend this firm to any service business owners looking for professional book keeping and tax services.
Texas Medley
Owner, Service Contracting
Clovis, CA
Google review
We have been using High Velocity Accounting for a couple years now and are so thankful for their service! They are meticulous, thorough, dependable and always ready to deal with a curveball. Kind, patient, gracious. Thank you for your service and the relationship we've developed together.
Grant Schoenberger
Client, Trades
Clovis, CA
Google review
Brett Neal has been our family's accountant for over six years now, because he is the most dependable professional in this business. We started with Brett as two separate single-filers with simple W-2's and quickly graduated to a married couple having multiple types of complicated business/tax filings. Brett took every shift in stride; every transition has been carried out smoothly and without any hiccups. Trust that this is the guy for all your filing, bookkeeping, and financial consulting needs.
Alyssa Cotrina
Business Owner, Trades
Clovis, CA

Where we do this work

Our office is in Clovis and we work with home services contractors across the Central Valley and nationwide. Pick your city to see how lender and investor support works for shops in that market.

Not on the list? We run every engagement over QuickBooks Online, ServiceTitan, and Housecall Pro, so distance does not change the work. Call (559) 203-3450.

Talk to a CPA who will actually pick up the phone

Start with a 30-minute consultation at no cost. You will leave it knowing what the work involves, what it costs, and what happens next.