Free tool · Debt coverage
Debt service coverageratio calculatorfor business loans.
Enter a year of operating income and the debt payments it has to carry. The calculator shows your DSCR, how it compares with the coverage a lender wants, and how large a new loan the income supports.
Your numbers
Usually EBITDA: profit before interest, taxes, depreciation and amortization.
Principal and interest on current loans, notes, leases and advances.
Proposed new loan
Leave blank to test current debt only.
Annual rate.
Monthly payments.
Coverage the lender wants
1.25× is the most common bar.
Nothing you type leaves this page unless you choose to send your result below.
helcyon · debt coverage
Example figures
Debt service coverage ratio
1.23×
$38,995 a year left after debt payments.
Below the target
Operating income covers the payments, but with less cushion than the 1.25× you chose. One soft quarter could turn it into a shortfall.
1.00×
1.25× target
0
2.5×+
Operating income / yrIncome
$210,000
Debt service / yrPayments
$171,005
Cushion / yrCushion
$38,995
The new loan adds $76,005 a year ($6,334 a month) to existing payments of $95,000.
Helcyon reads debt payments from the transactions
See Obligation Integrity →What the income supports
At a 1.25× target
Largest new loan at 1.25×
$480,229
9% over 10 years, after existing payments
Operating income needed for 1.25×
$213,757
$3,757 more than today
Coverage with income up 10%
1.35×
From 1.23× today
Next step
Have Helcyon read this from your books
This tool works from the numbers you typed today. Helcyon reads them from your accounting system, rechecks them as new transactions land, and tells you in plain English when one starts to move. Leave your details and we will set up a walkthrough on your own figures. We reply within one business day.
The method
How to calculate the debt service coverage ratio.
DSCR is one division. Lenders spend their time on the two numbers that go into it, so that is where yours should go too.
The formula
To find the largest loan a business can carry, run it backwards: divide operating income by the target ratio, subtract existing payments, and the remainder is the annual payment a new loan can take.
Worked example
A business earns $210,000 a year before interest, taxes, depreciation and amortization, and pays $95,000 a year on existing loans. It wants to borrow $500,000 at 9% over 10 years.
Just under a 1.25× bar. At 1.25× the income supports about $480,000 on the same terms, or the loan needs about $213,757 of operating income.
Start from a full year of operating income
Use twelve months, from the last fiscal year or the trailing twelve. For most businesses that is EBITDA. Add back only what you can document, such as owner pay above a market salary or a cost that will not recur.
List every payment the income has to carry
Principal and interest on every loan, note, lease, line of credit and advance, for the same twelve months. Then add the annual payment on the loan you want. Lenders count all of it.
Divide, then test it against the target
Income divided by debt service is the ratio. Compare it with the coverage the lender wants. If it falls short, the gap tells you how much income to add or how much less to borrow.
Reading the result
What a good DSCR looks like.
The calculator sorts the ratio into three readings against the target you choose. Most lenders start the conversation at 1.25×.
Below 1.00×
Shortfall
Operating income does not cover the payments. The gap is being met from reserves, new borrowing or the owner, and adding debt makes it wider.
1.00× to the target
Below the target
The payments are covered, with less cushion than a lender wants. A slow quarter or a rate reset can move it under 1.00×.
At or above the target
Meets the target
The income carries the debt with the cushion the lender asked for. The lender will still test where the income comes from and whether it holds.
SBA 7(a) acquisition loans
Buying a business with an SBA loan: 1.25× on historical results.
Under SBA SOP 50 10 8.1, effective October 1, 2026, most change-of-ownership loans must show at least 1.25× coverage for all debt, measured on the last fiscal year or the average of the last two. Qualifying business expansion deals may use 1.15×. Projections are still required but cannot be used to meet the minimum. The SOP is revised regularly, so confirm the current requirement with your lender.
These readings are not lending advice and they are not a credit decision. A lender also weighs collateral, the owners' personal finances, the industry and the direction of the numbers.
Where a calculator stops
A coverage ratio is only as good
as the income behind it.
The division takes a second. Underwriting takes weeks, because the lender is testing whether the income in the numerator is real and recurring.
01
It is one year
A single ratio says nothing about direction. 1.40× and falling for three years reads differently to a lender than 1.30× and rising.
02
It trusts the income figure
Lenders test where operating income comes from. A one-time contract, a deferred bill or an aggressive add-back can carry a ratio that will not hold.
03
It only knows the debt you list
A merchant cash advance, a seller note or a lease you forgot to enter still takes cash every month, and the lender's file will include it.
Obligation Integrity · Cash Production Capacity
The debt and the income, read from the transactions.
Helcyon reads the debt payments recorded in the books and separates financing cost from principal on each one. Cash Production Capacity then shows financing claims against the cash recurring operations produced, so an owner, advisor or lender can tell a weak operation from a productive one carrying outside uses. Every figure traces to its transactions. It is not a credit rating or a lending decision.
Connects with the tools you already use
Questions
DSCR, answered plainly.
What is the debt service coverage ratio?
The debt service coverage ratio (DSCR) compares the income a business earns from operations with the debt payments it has to make over the same period. A DSCR of 1.00 means operating income exactly covers principal and interest. Above 1.00 there is a cushion; below 1.00 the payments are being met from somewhere other than the operation.
How do you calculate DSCR?
Divide annual net operating income by annual debt service. For an operating business, net operating income is usually EBITDA: profit before interest, taxes, depreciation and amortization. Debt service is every principal and interest payment due over the same twelve months, including any new loan. Operating income of $210,000 against $171,005 of debt service is a DSCR of 1.23.
What is a good DSCR for a business loan?
Many lenders look for at least 1.25, which leaves a 25% cushion between operating income and debt payments. For SBA 7(a) loans, SOP 50 10 8.1 (effective October 1, 2026) requires most business acquisitions to show at least 1.25 on historical results, with qualifying business expansion deals at 1.15; projections cannot be used to meet the minimum. Requirements change, so confirm the current figure with your lender.
What counts as net operating income for DSCR?
For an operating business, lenders usually start from EBITDA and may adjust it for documented items such as owner compensation above a market salary or a genuinely one-time expense. They differ on which adjustments they accept. For a rental property, net operating income means rent collected minus operating expenses; this calculator is built for operating businesses.
What counts as debt service?
All scheduled principal and interest on business debt over the next twelve months: term loans, equipment notes, vehicle loans, real estate loans, interest on lines of credit, merchant cash advance remittances, seller notes that are being paid, and the proposed new loan. Leaving a payment out makes the ratio look better than a lender will calculate it.
What is global DSCR?
Global DSCR combines the business with the owners who guarantee the loan: business cash flow plus the owners' personal income, against business debt plus the owners' personal debt payments. Lenders use it when owners guarantee a loan, because the household has to be able to carry both. This calculator measures the business on its own.
How can a business improve its DSCR?
Raise operating income, lower annual debt service, or both. Annual debt service falls when a loan has a longer term or a lower rate, or when expensive short-term debt such as a merchant cash advance is paid off or refinanced. Owner distributions do not change EBITDA, but lenders read them alongside coverage, so heavy draws in a weak year weaken the application.
Does this calculator save or send my numbers?
No. The calculation runs in your browser, and the figures you type are never stored or sent. If you ask for a walkthrough at the bottom of the tool, Helcyon receives your name, email and role, plus your one-line result only if you tick the box to include it.
How does Helcyon read debt and coverage?
Helcyon reads debt payments from the business's own transactions with read-only access. Its Obligation Integrity module separates financing cost from principal on each recorded payment, and Cash Production Capacity shows financing claims against the cash recurring operations produced, so a reader can tell a weak operation from a productive one carrying outside uses. Helcyon does not issue credit ratings or lending decisions.
Know what your debt costs before the lender does.
The calculator gives you one year's ratio once. Helcyon reads the debt payments and the income behind them from your books, and shows financing claims against what the operation produced.