What is debt service reserve account?

The Debt Service Reserve Account (DSRA) is a reserve used to make debt repayments when the cash flow available to service debt is too low. The DSRA is a safety measure that gives the borrower time to deal with a lack of cash flow available to service debt and prevents them from defaulting.

What is a debt service reserve letter of credit?

Debt Service Reserve Letter of Credit means a letter of credit substantially in the form of Exhibit A, issued or to be issued by the Issuing Bank, or any letter of credit issued by the Issuing Bank in replacement thereof.

What is DSR account?

DSR Account means the senior debt service reserve account established pursuant to Section 5.16 to meet potential shortfalls in interest or principal payments on the Loan.

What is debt service example?

How Does Debt Service Work? For example, let’s say Company XYZ borrows $10,000,000 and the payments work out to $14,000 per month. Making this $14,000 payment is called servicing the debt.

Is debt service an operating expense?

Examples of operating expenses include wages for employees, research and development, and costs of raw materials. Operating expenses do not include taxes, debt service, or other expenses inherent to the operation of a business but unrelated to production. See also: Operating income.

What is debt service mean?

Refers to payments in respect of both principal and interest. Actual debt service is the set of payments actually made to satisfy a debt obligation, including principal, interest, and any late payment fees.

What is a debt service escrow account?

Debt Service Escrow Account means that account established pursuant to Section 5.04 of the Indenture into which Excess Cash shall be deposited until it has $2,000,000 at any time that the amount in the Debt Service Escrow Account is below $2,000,000 prior to the deposit of any Excess Cash into the Sinking Fund.