Debt service coverage calculator
Lenders approve a business loan when the business earns comfortably more than the payments. Enter your cash flow and the loan. See your ratio and the biggest loan it supports.
What the ratio means
The debt service coverage ratio (DSCR) is the cash the business generates in a year divided by all the loan payments due in that year. A ratio of 1.0 means every dollar of cash flow goes to the lender. A ratio of 1.25 means the business earns 25% more than the payments, which is the cushion most lenders want.
Lenders measure cash flow differently. For a business with an owner who works in it, many deduct a fair manager's salary first. Use the most conservative figure you can support with your tax returns.
Work you can look at
Questions people ask
What is a good DSCR for a business loan?
1.25 or higher is the common target. Under 1.0, the business cannot cover the payments from its cash flow. Between 1.0 and 1.25, approval is possible but less likely.
What counts as cash flow here?
Most lenders start from EBITDA (earnings before interest, taxes, depreciation and amortization) and adjust for what the owner is paid. Use the EBITDA calculator if you are not sure of the figure.
Is this the same as the real estate DSCR?
The idea is the same, but real estate versions use net operating income from rent. This one is for an operating business, where cash flow comes from running the company.
Is this financial, legal or tax advice?
No. It is a free estimate to help you plan and to start a conversation with your lender, accountant or advisor. Check the real figures with them before you decide.
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This is an estimate for planning, not financial, legal or tax advice.