What is Global Cash Flow Analysis?
An underwriting approach that consolidates the cash flows of all related entities and guarantors — not just the borrowing entity — to assess total repayment capacity.
Global Cash Flow Analysis in commercial lending practice
Global cash flow analysis is standard practice for small business and owner-operated commercial loans where personal and business finances are intertwined. The analysis traces K-1 distributions across tiered ownership, eliminates intercompany transactions, and rolls up consolidated cash flow at the guarantor level. SBA underwriting requires global cash flow on virtually every credit, and most owner-occupied CRE deals include it as part of the credit memo. AI-automated global cash flow handles the K-1 tracing and intercompany eliminations that consume the most analyst time.
Worked example
Global Cash Flow Analysis in numbers
Setup
A guarantor owns 100% of an operating company (S-corp), 50% of a real estate holding LLC, and a personal residence. The S-corp generates $420,000 of cash flow available for debt service, pays $180,000 of debt service of its own, and distributes $150,000 to the guarantor on the K-1. The real estate LLC generates $90,000 of NOI, services $60,000 of debt, and distributes the guarantor's 50% pro-rata share of remaining cash. The guarantor's personal debt service (mortgage, auto) is $48,000.
Calculation
Operating company cash to guarantor (after entity debt service) = $150,000 distributed
Real estate LLC cash to guarantor = ($90,000 − $60,000) × 50% = $15,000
Guarantor consolidated cash available = $150,000 + $15,000 = $165,000
Guarantor consolidated debt service = $48,000
Global DSCR = $165,000 ÷ $48,000 = 3.44x
Interpretation
The global DSCR is comfortably above policy minimums, but the analyst must verify two things on the K-1: that the $150,000 figure represents actual cash distributions (Box 19 on the 1065 K-1), not just allocated income (Box 1), and that the operating company's debt service is not double-counted at both the entity and the guarantor level. These two errors are the most common manual-spreading mistakes and the place AI cash flow tools earn their cost.
Variations by loan type
How Global Cash Flow Analysis differs across CRE, C&I, and SBA
SBA
SBA SOP requires global cash flow on every guarantor with 20% or greater ownership in the borrower. Standard practice is to consolidate all related entities, eliminate intercompany debt, and produce both a global DSCR and an FCCR (typically 1.15x minimum on 7(a) deals).
Owner-occupied CRE
Most owner-occupied CRE deals include global cash flow as standard. The borrower's real estate LLC is consolidated with the operating company that occupies the property, the guarantor's personal cash flow, and any other related real estate entities. Lease payments between the operating company and the real estate LLC are eliminated as intercompany.
C&I
Required when guarantor support is material to the credit, particularly on owner-operated businesses, multi-entity sponsor structures, and any deal where the guarantor has significant outside business or real estate holdings. Skipping global cash flow on a credit where the guarantor matters is a common examiner finding.
Calculators
Run the math yourself
Further reading
Go deeper on Global Cash Flow Analysis
Frequently asked
Global Cash Flow Analysis FAQ
What is the difference between global cash flow analysis and DSCR?
DSCR measures the cash flow of one entity (the borrower or one property) against its own debt service. Global cash flow analysis consolidates all related entities and the personal guarantor into a single cash flow picture, with intercompany transactions eliminated, and measures the consolidated cash against the consolidated debt service. The two analyses can produce very different conclusions on the same credit.
Should overlapping debt be eliminated in global cash flow?
Yes. If the guarantor personally guarantees the operating company's loan and that loan is also being serviced from operating-company cash flow, counting the debt service in both the entity DSCR and the global guarantor DSCR double-counts it. Best practice is to eliminate the entity-level debt service from the guarantor-level analysis (or vice versa) and document the elimination clearly.
How is K-1 income treated in global cash flow?
Carefully. The 1065 and 1120-S K-1 distinguish allocated income (the partner's share of taxable income) from actual cash distributions. Only actual distributions are real cash to the guarantor. Counting allocated income as cash overstates the guarantor's repayment capacity and is one of the most common spreading errors on owner-operator credits.
Why is SBA so strict on global cash flow analysis?
Because SBA loans are partially guaranteed by the federal government, and the SBA wants to ensure the bank has done a complete repayment-source analysis before approving the loan. SOP 50 10 explicitly requires global cash flow on every 20%-or-greater owner and gives examiners specific documentation requirements. SBA audit findings on incomplete global cash flow can affect a bank's SBA lending status.
Related terms
Related concepts in commercial underwriting
Schedule K-1
A tax form (Form 1065 K-1, 1120-S K-1, 1041 K-1) that reports a partner's, shareholder's, or beneficiary's share of income, deductions, and credits from a partnership, S-corporation, or trust.
Read definitionSBA Loan (Small Business Administration)
A loan partially guaranteed by the U.S. Small Business Administration, reducing lender risk and enabling access to capital for small businesses that might not qualify for conventional financing.
Read definitionDSCR (Debt Service Coverage Ratio)
The ratio of net operating income (or available cash flow) to total annual debt service, including principal and interest payments.
Read definitionFixed Charge Coverage Ratio (FCCR)
A broader coverage metric than DSCR that includes all fixed obligations — debt service plus lease payments, insurance, taxes, and other recurring costs.
Read definitionFinancial Spreading
The process of extracting financial data from tax returns, financial statements, and other documents and organizing it into a standardized format for credit analysis.
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How Global Cash Flow Analysis shows up in AI underwriting
Aloan automates the underwriting analysis where global cash flow analysis matters — spreading, global cash flow, credit memo generation — with source-cited audit trails on every figure. See it run on a real deal in your standardized format.
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