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Can You Cover Your Debt?

With $120,000 of net operating income and $90,000 of annual debt service, your DSCR is 1.33 — every $1 of debt is covered by $1.33 of income, leaving $30,000 of headroom. Most lenders want at least 1.20-1.25.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

DSCR = Net Operating Income / Total Debt Service. Below 1.0 you cannot cover debt from operations; 1.20-1.50 is the typical lender comfort zone for small-business term loans. It is the single most common loan-qualification ratio.

What Should You Do?

Scenario 1: DSCR of 0.95 means you are running a deficit and will not qualify without more income or less debt. Scenario 2: lifting NOI 10% (to $132k) pushes DSCR to 1.47. Scenario 3: refinancing to cut debt service from $90k to $80k lifts DSCR to 1.50.

Frequently Asked Questions

What DSCR do lenders require?

Often 1.20-1.25 minimum for SBA and bank loans, higher for riskier profiles. Confirm with your lender.

NOI vs net income?

NOI excludes interest, tax, and non-operating items — it is operating cash available for debt, which is why lenders use it.

How do I improve DSCR?

Raise operating income or restructure/refinance debt to lower service. See our Loan Payment tool.

Authoritative References

Investopedia — DSCR — Debt service coverage ratio definition and benchmarks.
SBA — Loan Requirements — SBA lender qualification ratios.