Calculator
DSCR Calculator: Debt Service Coverage Ratio for a Business Loan
Lenders compare your cash flow with your debt payments before they approve a loan. Check your coverage before and after the loan you want, and see the largest loan your cash flow supports.
Results
Coverage today
7.50x
Coverage with the new loan
2.76x
Meets your 1.25x target
New loan payments per year
$41,325
$3,444 a month
Largest new loan at 1.25x
$725,953
$10,000 a month at 11% over 120 months
What the debt service coverage ratio tells a lender
The debt service coverage ratio (DSCR) divides the cash your business generates in a year by the principal and interest it owes in that year. At 1.50x, you earn $1.50 for every $1 of debt payments. Below 1.00x, your cash flow doesn't cover your payments.
Short-term financing with daily or weekly payments can eat into coverage quickly. If you're weighing a cash advance against a loan, run both through the MCA vs business loan calculator too.
How we calculate
New loan payments are the level monthly payment on a fully amortizing loan at your rate and term, times 12. Coverage is annual cash flow divided by existing plus new annual debt payments.
Largest new loan works backward: cash flow divided by your target ratio, minus existing payments, gives the most you could pay each year. We convert that to the loan amount it would repay at the same rate and term.
Questions
What's a good debt service coverage ratio?
Above 1.00x means your cash flow covers your debt payments. Lenders usually want a cushion above that, and each sets its own minimum, so ask your lender which ratio and which definition of cash flow it uses.
Which cash flow figure should I use?
Lenders differ. Many start from net operating income or EBITDA and may adjust for owner pay, one-time items or taxes. Using your lender's definition gives you the closest estimate.
Should I include credit card balances and cash advances?
Include any recurring required payments on business debt, including advances, equipment loans and leases. Your lender decides what it counts, so list everything when you apply.
Related financing research
More funding calculators
Business financing cost calculator
Turn a factor rate into total payback, cost per payment and an estimated APR.
Open →Merchant cash advance calculator
See payback time and estimated APR when an advance is repaid as a percentage of your sales.
Open →MCA vs business loan calculator
Compare total cost, monthly cash out and APR for an advance and a term loan side by side.
Open →Revenue-based financing calculator
Model a revenue share and repayment cap at your growth rate.
Open →Loan payment calculator
Estimate your monthly payment and total interest on a fixed-rate loan.
Open →