Business loan DSCR calculator.

How it is calculated

Cash flow available for debt service = net income + interest expense + depreciation and amortization + other non-cash add-backs − owner draws. DSCR = that cash flow ÷ total annual debt service (principal plus interest on all loans). The new loan's annual debt service is twelve times its level monthly payment (or its yearly interest if interest-only). The largest new loan works backward: cash flow ÷ your target ratio gives the most total debt service you can carry, subtract existing debt service, and find the loan whose payment equals the rest. The cushion is how far cash flow could fall before the ratio reaches 1.00x.

Worked example

Net income $80,000.00, interest $10,000.00, depreciation $20,000.00 and owner draws $30,000.00 give cash flow of $80,000.00. Existing debt service is $40,000.00, so today's ratio is 2.00x. A $100,000.00 loan at 8% over 5 years adds $24,331.67 a year, taking the ratio to 1.24x, just under a 1.25x target. At 1.25x the most total debt service is $64,000.00, which leaves $24,000.00 for a new loan, about $98,636.87 at these terms. Cash flow could fall 19.6% before the ratio reaches 1.00x.

Sources and limits

The ratio of net operating income before debt service to annual debt service is the standard definition; one regulatory use appears in the bank capital instructions for multifamily mortgages in the FFIEC Call Report RC-R instructions (120% for fixed-rate and 115% for adjustable-rate loans in that specific test; retrieved 2026-10-16). That is not a minimum for business loans in general. Every lender defines cash flow its own way, may use tax returns, add other owner income or count a global cash flow, and sets its own required ratio, which is why the target here is your input. The commercial real estate DSCR calculator covers property income.

FAQ

What is a good DSCR for a business loan?

There is no single number. Lenders choose their own minimum and ask for it in the loan terms. Ask yours, enter it as the target and read the largest loan it supports.

How do you calculate DSCR?

Divide cash flow available for debt service by the total annual principal and interest payments. A ratio of 1.00x means cash flow just covers the payments.

Do I add back owner draws?

No, subtract them. Money the owner takes out is not available to pay the lender, so this page treats draws as a reduction in cash flow.

Why is interest added back?

Debt service already includes interest. Adding it back to net income avoids counting it twice in the ratio.