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DSCR calculator: debt service coverage for a business loan

Debt service coverage compares the cash a business generates with what it must pay on its debts each year. Enter yours to see the ratio now, with a proposed loan, and how much room is left at your target.

Cash flow and debt (yearly) Net operating income or cash flow available for debt ($/yr) Current debt payments, principal and interest ($/yr) Target DSCR

Proposed new loan (optional)

Amount ($)

Rate (%) Term (years)

DSCR today: –
DSCR with the new loan: –
New loan payments ($/yr): –
Most total debt service at target: –
Room for new payments ($/yr): –
Largest new loan at this rate and term: –

Short answer

DSCR = cash flow available for debt service ÷ annual principal and interest payments. A business with $180,000 of cash flow and $60,000 of yearly debt payments has a DSCR of 3.00x. Below 1.00x means the business doesn't earn enough to cover its debt payments. SBA guidance since March 2026 sets a 1.1x minimum for 7(a) Small Loans; many lenders want more.

How it's calculated

DSCR = cash flow available for debt service ÷ annual debt service new loan's annual debt service = monthly payment × 12 most debt service at target = cash flow ÷ target DSCR room for new payments = most debt service at target − current debt service largest new loan = present value of (room ÷ 12) per month over the term at the rate

The new-loan payment uses the standard amortizing formula with monthly payments.

Example

With the default inputs: cash flow $180,000; current payments $60,000; target 1.25x; proposed $250,000 loan at 9% over 10 years.

DSCR today: 180,000 ÷ 60,000 = 3.00x
New loan payments: about $38,003 a year ($3,166.89 a month)
DSCR with the loan: 180,000 ÷ 98,003 ≈ 1.84x
Most debt service at 1.25x: 180,000 ÷ 1.25 = $144,000
Room for new payments: $84,000 a year, enough for a loan of about $552,600 at 9% over 10 years

Reading the result

Below 1.00x: debt payments exceed cash flow. Borrowing more would make that worse.
1.00x to your target: the business covers its payments, but with little cushion for a bad month.
Above target: coverage looks comfortable on these numbers. Lenders still look at credit, collateral, history and much more.

Test a bad year too: cut cash flow by 20% and see where the ratio lands. If the loan only works in good years, consider a smaller amount or a longer term.

Sources

Questions people ask

What counts as cash flow available for debt service?

Lenders differ. A common starting point is net income plus interest, depreciation and amortization (roughly EBITDA), adjusted for one-time items and, in small businesses, sometimes for owner compensation and owner living expenses. Ask your lender which method they use.

What DSCR do lenders want?

Each lender and program sets its own minimum. SBA's 2026 guidance sets 1.1x for 7(a) Small Loans; banks often set higher thresholds in their policies and covenants. Higher is safer for you, too.

Does DSCR include lease payments?

Some lenders include rent and equipment leases in a 'fixed charge coverage ratio' instead. If you have large lease obligations, ask how they'll be treated.