Debt Service Coverage Ratio (DSCR) Calculator
DSCR measures how much cash flow your business generates relative to its total debt obligations — the number nearly every SBA lender checks first.
This is an estimate only, not a lending decision or pre-qualification. SBALoanPro is not affiliated with, endorsed by, or operated by the U.S. Small Business Administration. Individual lenders may calculate DSCR differently.
Methodology & Assumptions
DSCR = Net Operating Income ÷ Total Debt Service. This calculator computes NOI as revenue minus operating expenses plus your depreciation/amortization addback, and Total Debt Service as your existing annual debt payments plus the new loan's estimated annual payment. This mirrors the general approach most SBA lenders use, but real underwriting can differ — some lenders add back owner compensation above a market rate, exclude one-time or non-recurring items, or use a "global cash flow" analysis that also factors in personal income and debt. Treat the result here as a directional check, and confirm the exact calculation method with your lender.
Worked Example
Inputs: $900,000 revenue · $740,000 operating expenses · $20,000 depreciation addback · $90,000 existing debt · $40,000 new loan payment.
NOI = $900,000 − $740,000 + $20,000 = $180,000. Total debt service = $90,000 + $40,000 = $130,000. DSCR = $180,000 ÷ $130,000 ≈ 1.38 — in the "Good" range most SBA lenders look for, though a specific lender's minimum threshold and exact NOI treatment can still shift the outcome.
General DSCR Benchmarks
These bands are widely used as rough guidance across SBA lending, not a guarantee from any specific lender: below 1.0 typically signals the business doesn't generate enough cash to cover its debt on paper and often results in denial; 1.0–1.24 is marginal and may need a strong compensating factor like credit history or collateral; 1.25–1.49 is generally considered an acceptable, "good" range for many SBA 7(a) lenders; 1.5 and above is considered strong and often supports the most favorable terms. Individual lenders set their own actual minimums, which can be higher or lower than these general bands.
Frequently Asked Questions
What counts as net operating income here?
Annual revenue minus operating expenses, plus a depreciation/amortization addback — the general logic lenders use, though specific underwriting may add further adjustments.
Why does the calculator include both existing and new debt?
Lenders check whether cash flow supports all obligations after the new loan closes, not just the new payment alone.
Is this the same DSCR my lender will calculate?
Not necessarily — lenders may use different addbacks or a global cash flow analysis. Treat this as a directional check, not a substitute for underwriting.