DSCR Calculator (Debt Service Coverage Ratio)
Find out whether your cash flow covers your loan payments. Enter your net operating income and total debt service to get your DSCR, the lender verdict, and how much cash is left after debt — updated instantly.
How the DSCR calculator works
The debt service coverage ratio, or DSCR, is the single number most lenders use to decide whether your business can afford a loan. It compares the cash your business generates to the debt payments it has to make. A ratio above 1.0 means you produce more income than you owe; below 1.0 means you fall short.
where net operating income is revenue minus operating expenses (before debt), and total debt service is the principal plus interest due for the same period.
For example, a business with $150,000 of net operating income and $100,000 of total debt service has a DSCR of 1.50x — it earns one and a half times what it needs to cover its debt. The extra $50,000 is the cash flow cushion left over after debt payments, money you can reinvest, save, or use to absorb a slow month.
What lenders look for
- 1.25 and above — Strong. This is the level most banks and SBA lenders want to see. It shows a healthy buffer between income and debt.
- 1.00 to 1.24 — Tight. You cover your payments but with little margin for error. Lenders may still approve, often at higher rates or with conditions.
- Below 1.00 — Shortfall. Your income does not fully cover your debt. Most lenders will decline, and taking on more debt is risky.
How to improve your DSCR
- Raise net operating income by increasing revenue or trimming operating costs — check your profit margin.
- Lower total debt service by refinancing to a longer term or a lower rate.
- Consolidate high-cost debt to shrink your monthly payments — try the debt consolidation calculator.
- Model a new loan's payment first with the business loan calculator before you commit.
Because the period cancels out of the formula, you can enter annual or monthly figures and get the same ratio — just keep income and debt on the same period. Use the toggle to match whichever your lender asks for.
Frequently asked questions
What is a good DSCR for a business loan?
Most lenders want a DSCR of at least 1.25, meaning your net operating income is 125% of your total debt payments. A ratio of 1.00 to 1.24 is tight, and anything below 1.00 means your income does not cover the debt.
How is DSCR calculated?
DSCR equals net operating income divided by total debt service. Net operating income is your revenue minus operating expenses (before debt payments), and total debt service is the principal and interest you owe over the same period.
Should I use annual or monthly figures?
You can use either, as long as both the income and the debt service cover the same period. The ratio is the same whether you use annual or monthly numbers because the period cancels out.
What is total debt service?
Total debt service is the full amount of principal and interest due on all your business debt for the period, including existing loans and any new loan you are applying for.
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This calculator is for educational and informational purposes only and does not constitute financial, legal, or lending advice. Estimates are based on the values you enter. Confirm all terms and requirements with a qualified lender before making decisions.