Business Loan Affordability (DSCR) Calculator
Enter your monthly revenue, monthly expenses and the loan payment you're considering to calculate your Debt Service Coverage Ratio and a general affordability read.
Business Loan Affordability (DSCR) Calculator
Calculates the Debt Service Coverage Ratio (DSCR) to gauge whether a business can comfortably afford a proposed loan payment.
This calculator computes net operating income (revenue minus operating expenses, excluding the loan itself) and divides it by the proposed loan payment to produce the Debt Service Coverage Ratio, a standard metric lenders use to assess whether a business can comfortably service new debt. It also gives a general affordability read based on commonly referenced DSCR thresholds, helping you sanity-check whether a proposed loan payment fits your business's cash flow before formally applying.
Example
- With the default values shown above, this calculator returns: Net Operating Income ≈ $18000; Debt Service Coverage Ratio (DSCR) ≈ 2.25; General Affordability Read = 2.25.
Frequently Asked Questions
What is DSCR?
Debt Service Coverage Ratio measures how many times over your net operating income covers a proposed debt payment — a DSCR of 1.0 means income exactly covers the payment with nothing left over, while lenders typically want a healthy cushion above that.
What DSCR do lenders typically want?
Many commercial lenders look for a DSCR of at least 1.25, meaning income covers the loan payment with a 25% buffer — exact requirements vary by lender and loan type, so check with your specific lender.
Sources
- Standard formula, publicly documented method