Debt service coverage ratio (DSCR) calculator
Work out how comfortably your business’s income covers its loan repayments, including a new loan you are considering.
How this calculator works
DSCR is income available for debt service divided by total annual debt service (capital and interest on all borrowing). A ratio of 1.00 means income exactly covers repayments; 1.50 means it covers them one and a half times.
The calculator adds the annual repayments on the new loan, worked out as a standard repayment loan, to your existing repayments. Headroom shows how much more, or less, annual debt service your income would support at a ratio of 1.25.
What lenders will look at
Many lenders look for a ratio of around 1.25 or higher, but each lender sets its own threshold and defines income in its own way, for example adjusting EBITDA for directors’ pay, one-off items or rent. Property lenders often use a rental cover test instead.
A ratio below the lender’s threshold does not always end the conversation: a longer term, a smaller loan, or refinancing existing debt can improve it. Our guide to how lenders assess business loan applications explains the wider picture.
Find out more about secured business loans, or tell us what you need and we will search the market for lenders suited to your case.
Questions about this calculator
What is a good debt service coverage ratio?
Above 1.00 means income covers repayments. Many lenders look for around 1.25 or more so there is a buffer if trading dips, though thresholds vary by lender, sector and type of loan.
What counts as income for DSCR?
Lenders often start from EBITDA (earnings before interest, tax, depreciation and amortisation) for a trading business, or net rent for an investment property, then make their own adjustments.
How can I improve my DSCR?
Borrow less, spread repayments over a longer term, or consolidate existing debt into a structure with lower annual repayments. Growing profit improves it too. See debt consolidation loans.
Other tools
- Business loan calculatorMonthly repayments, total interest and total cost of a term loan.
- Commercial mortgage calculatorRepayments and loan to value on a commercial property purchase.
- Asset finance calculatorMonthly payments on equipment and vehicles, with deposit and balloon.
- Invoice finance calculatorCash your unpaid invoices could release, and the monthly cost.
- Merchant cash advance calculatorTotal repayable and repayment time from a share of card takings.
- VAT calculatorAdd or remove VAT at the current UK rates.
Want real figures for your business?
A calculator can only use the numbers you give it. Tell us what the funding is for and we will search our panel of 300+ lenders for options suited to your case. No obligation, and free to enquire.