Business DSCR & Loan Capacity
Your debt service coverage ratio today and after a new loan, plus the largest loan your cash flow supports.
Example scenario—not a forecast or verified benchmark. Enable JavaScript to edit inputs, view charts, save locally and export your analysis.
Example inputs
- Annual EBITDA
- 650,000
- Cash taxes paid (business or owner pass-through)
- 90,000
- Unfinanced capital expenditures
- 50,000
- Owner distributions above a market salary
- 0
- Existing annual debt payments (principal + interest)
- 180,000
- New loan amount you are considering
- 750,000
- Interest rate on new loan
- 10
- Loan term
- 7
- Lender's minimum DSCR
- 1.25
Example results
DSCR is 2.83x today and 1.55x with the $750K loan (passes 1.25x); your cash flow supports up to $1.1M of new debt.
- DSCR with new loan
- 1.55x
- Maximum supportable new loan
- $1,144,497
- DSCR today
- 2.83x
- Cash flow available for debt service
- $510,000
- New loan annual payment
- $149,411
- Annual cushion above minimum DSCR
- $98,237
- Cash-flow drop before covenant breach
- 19.3%
What stands out
DSCR after the loan: 1.55x
Clears the 1.25x minimum with $98K/year of cushion. Cash flow could fall 19% before you breach.
Maximum supportable loan: $1.1M
At 10% over 7 years, your cash flow can carry $228K/year of new payments at 1.25x.
Current DSCR: 2.83x
On $180K of existing annual payments.
A 10-year term raises capacity to $1.4M
Longer amortization lowers the annual payment, so the same cash flow supports more debt, at the cost of more total interest.
Next actions
- Ask for $825K rather than the bare minimum so you have working-capital cushion, but keep DSCR above 1.4x for safety.
- Prepare a lender-ready add-back schedule (owner perks, one-time costs) since lenders may underwrite adjusted EBITDA, not reported.
- Model a downside: at a 19% cash-flow drop you would hit the minimum, so know which costs you would cut first.
Model assumptions & limitations
- DSCR = (EBITDA − cash taxes − unfinanced capex − excess distributions) ÷ annual principal and interest. Lenders define it differently; confirm their formula.
- Rule of thumb: many business lenders look for roughly 1.15–1.25x minimum DSCR. The 1.25x you entered is used here.
- New loan is modeled as fully amortizing with level monthly payments; no balloon, fees or interest-only period.
- Loan capacity reflects cash flow only. Approval also depends on collateral, credit, leverage and industry.