What DSCR measures
DSCR is the yearly cash flow available for debt divided by the yearly debt service. Debt service is the principal and interest due on all of the business's debt, including the new loan. For a commercial property the cash flow is usually the net operating income (NOI), rent less operating expenses. For an operating business it is usually EBITDA. A DSCR of 1.00 means the income just covers the payments.
SBA defines it the same way for 7(a) loans: operating cash flow, which it defines as EBITDA, divided by the future required principal and interest payments on all business debt, including the new SBA loan. This calculator charges interest monthly at the note rate divided by 12.
Worked example: a $900,000 SBA 7(a) loan on $180,000 of EBITDA
A business earns $180,000 of EBITDA and already pays $24,000 a year on other debt. A $900,000 loan at 7.5% amortized over 25 years costs $6,650.92 a month, or $79,811.05 a year. With the existing debt, debt service is $103,811.05 a year and the DSCR is 1.73.
A standard 7(a) loan of more than $350,000 needs 1.15, so the income is $60,617.30 above what the minimum needs. The largest loan the income supports at 1.15 is $1,494,399.20, and the income could fall by 42.33% before the DSCR reached 1.00. The income is 20.00% of the loan, the figure lenders call the debt yield.
SBA 7(a) minimum DSCR
Under SBA SOP 50 10 8.1, effective October 1, 2026, a 7(a) Small loan of $350,000 or less that is not a change of ownership needs a DSCR of at least 1.10 on a historical or projected basis. A standard 7(a) loan needs at least 1.15, and a global DSCR, which brings in the owners' own income and debts, of at least 1.00. When the loan buys a business as an initial acquisition, an owner buyout or an ESOP or cooperative conversion, the minimum is 1.25.
On a $300,000 loan with $70,000 of income and $5,000 of existing debt, the minimum is 1.10 and the DSCR is 2.21. On a $1,200,000 loan to buy a business, amortized over 10 years with $250,000 of income, debt service is $170,930.55 a year, the DSCR is 1.46 against the 1.25 needed, and the largest loan is $1,404,079.05. This page does not check the global DSCR.
Amortizing or interest only
An interest-only loan pays no principal, so debt service is lower and the DSCR is higher. For another lender asking 1.20, a $900,000 interest-only loan at 7.5% costs $5,625.00 a month, or $67,500.00 a year. With $120,000 of income and $24,000 of existing debt the DSCR is 1.31, against 1.16 if the loan amortized, and the largest loan at 1.20 is $1,013,333.33. Some lenders test an interest-only loan as if it amortized, so ask how yours does.
When the income does not cover the loan
With only $90,000 of income, the SBA example above has a DSCR of 0.87 against 1.15. The income is $29,382.70 short of what the minimum needs. The largest loan it supports is $611,879.99, so borrowing $288,120.01 less would meet the minimum. A longer amortization, an interest-only period, a lower rate or more income would also close the gap.
What this calculator leaves out
This is a planning check, not a credit decision. Lenders adjust EBITDA in their own way, and SBA lenders also look at the borrower's global cash flow, equity and collateral. The minimum you enter for another lender is your assumption. Fees, a balloon payment and a variable rate are not modeled, and the SBA loan size and term limits are not checked here.
To model a balloon at the end of the term, use the commercial loan balloon payment calculator .
For the full cost of a loan with fees and APR, use the business loan calculator .
Use the right country page
This page stays in US dollars and uses US terms: EBITDA, net operating income, amortization and SBA 7(a). The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK DSCR commercial loan calculator, which uses a lender's own minimum. The inputs reset and amounts are not converted.
Inputs for the US DSCR commercial loan calculator
Yearly net operating income or EBITDA
Rent less operating costs for a property, or EBITDA for a business, before debt payments and tax.
Yearly payments on existing debt
Principal and interest you already pay each year on other business debt. Enter zero for none.
New loan amount
How much you want to borrow.
Interest rate
The yearly note rate on the loan offer, charged monthly at one twelfth.
Payments on the new loan
Repayment pays off the principal and interest. Interest only pays just the interest.
Amortization period
The years the payments are worked out over, in whole months. An interest-only loan ignores it.
Stress test: extra interest
Percentage points added to the rate to test the loan at a higher rate. Enter zero for none.
Minimum DSCR from
An SBA 7(a) loan uses SBA's minimum for the loan size, or the acquisition minimum. Other lenders set their own.
Your lender's minimum DSCR
The lowest ratio your lender accepts. Used when you choose your lender's figure above.
CALCULATOR QUESTIONS
US DSCR commercial loan calculator questions
What DSCR does the SBA require for a 7(a) loan?
At least 1.15 for a standard 7(a) loan and 1.10 for a 7(a) Small loan of $350,000 or less that is not a change of ownership, plus 1.00 on a global basis. Buying a business needs 1.25. These come from SOP 50 10 8.1.
How do I calculate DSCR?
Divide yearly EBITDA or net operating income by yearly principal and interest on all debt. $180,000 against $103,811.05 of debt service is a DSCR of 1.73.
How do I calculate DSCR on an interest-only loan?
Use the interest as the payment: the loan times the yearly rate. $900,000 at 7.5% is $67,500.00 a year. With $24,000 of existing debt and $120,000 of income, the DSCR is 1.31.
What is a good DSCR for a commercial loan?
Non-SBA lenders set their own minimum, often higher than SBA's, and it varies with the property type and the business. Use your lender's figure. Below 1.00 the income does not cover the payments.
How much can I borrow for a given NOI?
Divide NOI by the minimum DSCR, take off existing debt service, and turn the rest into a loan over the amortization period. $180,000 at 1.15 supports up to $1,494,399.20 here.
What is global DSCR?
SBA's global DSCR brings the owners' own income and personal debts into the test. It must be at least 1.00. This calculator does not compute it.
What happens when I change country?
The United Kingdom option opens the separate UK DSCR commercial loan calculator, in pounds, with a lender's own minimum. Your inputs are reset rather than converted.