Debt Service Coverage Ratio (DSCR) is the #1 metric lenders use to approve SBA loans. Calculate your global DSCR instantly.
Your business net income before taxes, interest, depreciation, and amortization (EBITDA).
Total annual principal and interest payments on current debt.
Expected annual payments for the new SBA loan.
Lenders divide your NOI by your total debt service. Most SBA lenders require a minimum DSCR of 1.25x.
The DSCR (Debt Service Coverage Ratio) Calculator is a specialized tool designed to help you view your business finances exactly the way an SBA underwriter does. It measures whether your business generates enough cash to comfortably pay back its loans.
The calculator takes your business's Net Operating Income (NOI) and divides it by your total annualized debt service (your existing loan payments plus the estimated payments of the new SBA loan you are applying for). The resulting decimal is your DSCR. For example, a DSCR of 1.25x means your business generates $1.25 of income for every $1.00 of debt, leaving a 25% cushion for emergencies or market downturns.
Debt Service Coverage Ratio (DSCR) is arguably the most critical metric in SBA underwriting. It measures your business's ability to cover its debt obligations with its operating income. For standard SBA 7(a) and 504 loans, lenders universally look for a minimum DSCR of 1.15x to 1.25x.
While the SBA technically requires a minimum of 1.15x, individual banks (the actual lenders) usually overlay their own stricter requirements:
SBA lenders don't just look at business cash flow; they analyze Global Cash Flow. This means they combine the business's Net Operating Income (NOI) with the personal income and personal debts of all owners with a 20%+ stake.
If your tax returns show a low net income, don't panic. Lenders allow you to "add back" certain non-cash or one-time expenses to boost your NOI. Common SBA add-backs include: