DSCR Calculator

A DSCR of 1.25 or higher is generally considered good by lenders. This means you have 25% more income than needed to cover debt payments. 1.0 DSCR means you break even. Below 1.0 means you cannot cover payments. Higher DSCRs (1.5+) get the best loan terms and rates.

DSCR = Net Operating Income / Total Debt Service. Net Operating Income is your business income before interest, taxes, depreciation, and amortization (EBITDA). Total Debt Service includes all principal and interest payments due within the period.

Lenders use DSCR to assess your ability to repay debt. It shows whether your business generates enough income to cover loan payments with a safety cushion. A higher DSCR means lower risk for the lender. Most lenders will not approve loans with DSCR below 1.15-1.25.

If your DSCR is below lender requirements, you can: 1) Reduce the loan amount you are requesting, 2) Improve business profitability before applying, 3) Pay down existing debt, 4) Provide additional collateral, 5) Find a lender with lower DSCR requirements.

No. DSCR uses business income divided by debt payments (higher is better). Debt-to-Income (DTI) uses debt payments divided by income (lower is better). DSCR is used for business loans; DTI is more common for personal loans and mortgages.