DSCR is the single most important number a lender looks at when evaluating a business loan.
It measures whether your business generates enough income to cover its debt payments — with room to spare.
The Formula
Net Operating Income
Annual Debt Service
=
DSCR
Net Operating Income = Revenue minus operating expenses (before debt payments) Annual Debt Service = Total loan payments over 12 months
Simple example
$50,000
Net Operating Income
$40,000
Annual Debt Service
1.25x
DSCR
$50,000 ÷ $40,000 = 1.25x — This business generates $1.25 for every $1.00 of debt payments. That's exactly the minimum most lenders require.
What the numbers mean
Below 1.0x
Below breakeven
Can't cover payments
1.0x – 1.24x
Tight
No cushion
1.25x – 1.49x
Meets minimum
Most lenders' floor
1.5x+
Strong
Well above minimum
Why lenders care so much about DSCR
Lenders don't just want to know if you can make payments today — they want a cushion in case revenue dips.
A 1.25x DSCR means if your revenue dropped 20%, you could still cover your loan payments.
That buffer is what gives a lender confidence to say yes.
Calculate your Debt Service Coverage Ratio
Enter your business financials below to see your DSCR and understand where you stand with lenders.
—
Your DSCR
Enter your numbers below
Fill in your annual revenue, expenses, and proposed loan details to calculate your debt service coverage ratio.
💡 Two-step process: Enter your best estimates now to see where you stand. Once you've completed your P&L and financial statements in the Documents module, come back and update these numbers with your exact figures. More accurate numbers = stronger application.
Any existing business loan payments per year (0 if none)
🏦 Proposed Loan
$
%
Current small business rates: 9–14% depending on program and credit
$
Auto-calculated — or enter your lender's quoted payment
👥
Co-Borrower / Guarantor
Optional — add if a spouse, partner, or co-owner will be on the loan
$
Gross annual income from all sources
$
Mortgage, car, credit cards, student loans
Co-Borrower Coverage
Annual Income
—
Annual Debt
—
Personal DSCR
—
🌐
Global DSCR — Employment Income
Add W-2 or employment income to calculate your full ability-to-repay picture
💡 Why this matters: Lenders — especially CDFIs and SBA programs — look at your Global DSCR, which combines business income AND personal employment income. A startup with a low business DSCR may still qualify if the owner or co-borrower has a steady W-2 job.
$
From your W-2, pay stubs, or other employment. Enter 0 if none.
$
Mortgage/rent, car payments, credit cards, student loans