The required payments to cover principal and interest on outstanding debt.
For example, a trucking company has $12,500 in monthly debt service across all its loans — $7,200 for fleet financing, $3,800 for a commercial mortgage, and $1,500 on a line of credit — which a lender compares to monthly EBITDA to assess affordability.
Why it matters: It is a non-negotiable cash outflow; if debt service consumes too much operating cash, the business cannot invest or weather downturns.
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