Qualify & plan
DSCR calculator
See your debt service coverage ratio with a new loan included, and how it compares with the 1.25 many lenders look for.
How this is calculated
DSCR = annual net operating income ÷ annual debt payments
Annual debt payments = existing debt payments + the new loan’s monthly payment × 12.
Worked example
Net operating income of $204,000, existing debt payments of $90,000 a year, and a new $500,000 loan at 10.5% over 10 years ($6,746.75 a month, $80,961 a year): $204,000 ÷ $170,961 = 1.19.
Assumptions
- Net operating income is what the business earns after operating costs, before any loan payments.
- The new loan has a fixed rate and equal monthly payments.
- The ratio is rounded down to two decimals, so it never looks better than it is.
- Benchmarks vary by lender and loan type; 1.25 is common, not a rule.
Questions owners ask
What is a good DSCR?
Many lenders look for at least 1.25 — $1.25 of income for every $1 of debt payments. Some accept less with strong collateral; others want more.
What if my DSCR is below 1.0?
Income does not cover the debt payments. Lenders usually decline, or offer a smaller amount or a longer term.
How do I improve my DSCR?
Raise income, cut operating costs, pay off existing debt, or borrow less or over a longer term so the new payment is lower.
Read before you borrow
Guides behind the numbers.
01How much business loan can I get?
Estimate business borrowing capacity using revenue, cash flow, debt service, collateral and use of funds—without relying on misleading loan calculators.
Read the guide ↗
02Business loan requirements: the complete readiness checklist
Understand common business loan requirements, documents, credit and cash-flow signals lenders review, plus a step-by-step application checklist.
Read the guide ↗
03The capital stack behind a business acquisition
Learn how business acquisition financing combines buyer equity, SBA or conventional debt, seller notes and working capital in a practical capital stack.
Read the guide ↗Calculators give estimates for educational purposes only. They are not an offer, approval or commitment to lend. Actual rates, fees, terms and payments are set by independent providers and depend on their review. ScaleKit Financing is operated by Arch Ventures LLC and is not a lender.