Funding · 1 minute
DSCR calculator: Can your cash flow carry the loan?
The debt service coverage ratio is the first number a lender checks: how many dollars of cash flow you earn for every dollar of loan payments. Enter your numbers to see your DSCR, how a lender is likely to read it, and the largest new loan your cash flow can support.
Reading the number
What lenders see in your DSCR
A DSCR of 1.00x means the business earns exactly enough to make its payments, with nothing left over. Most conventional and SBA lenders want to see roughly 1.20x to 1.35x at minimum, because a business with no cushion cannot absorb a slow quarter. Higher is better, but only if the cash flow behind it is believable: a strong ratio built on optimistic projections convinces nobody.
Lenders also look at the lowest the ratio gets over the life of the loan, not just this year. Our guide on how lenders read a DSCR explains why, and what lenders actually look for covers the rest of the file. If you are building the case for a loan, a lender-ready business plan and financial model shows the DSCR year by year. In North Texas, see our business plan writers in Dallas.
This calculator gives a planning estimate only. It is not financial advice or a loan offer, and every lender calculates DSCR under its own rules.
FAQ
DSCR questions
What is a good DSCR for a business loan?
Most conventional and SBA lenders look for a debt service coverage ratio of roughly 1.20x to 1.35x at minimum, meaning the business earns $1.20 to $1.35 of cash flow for every $1.00 of loan payments. Below about 1.20x there is too little cushion: one soft quarter and the loan cannot be serviced. Lenders set their own thresholds, so ask yours.
How do you calculate DSCR?
Divide the cash flow available to pay debt by the total debt payments due over the same period, usually a year. Cash flow available is typically operating income before interest, taxes, depreciation and amortization, adjusted for one-time items. Debt payments include principal and interest on every loan, the new one included.
What counts as cash flow in a DSCR calculation?
Lenders usually start from net operating income or EBITDA and add back non-cash expenses such as depreciation and amortization, plus clearly one-time costs. They generally do not add back owner draws or distributions the business actually needs to keep paying. Every lender has its own rules, so a conservative number is the safer one to plan around.
How much can I borrow based on DSCR?
Work backward: divide your cash flow by the lender’s minimum DSCR to get the most you can spend on all debt payments, subtract what you already pay, and the remainder is what a new loan payment can be. The calculator converts that payment into a loan amount at the rate and term you enter.
Does a high DSCR guarantee approval?
No. DSCR is one test among several. Lenders also look at credit, collateral, time in business, the quality of your financial statements and whether the projections are believable. A DSCR built on aggressive assumptions is less credible than a lower one built on conservative numbers.