DSCR Calculator for Commercial Loans
DSCR is cash flow available for debt service divided by debt service in the same period. This calculator asks you to pick the definition first — EBITDA, cash profit, CFADS or global — because the four produce different answers on identical accounts. Enter the numerator inputs, the interest and the principal falling due, and it returns the ratio and the headroom.
[EDITORIAL — embed the DSCR calculator component here. Field specification is in the "What are the inputs" section below. Do not publish this page without the live tool.]
Key facts
- No regulator gives you a formula. The OCC's Commercial Real Estate Lending booklet (Version 2.0, March 2022) requires that a bank's own policy set "Minimum standards for borrower or project net worth, support provided by guarantees (if applicable), borrower and guarantor cash flow, and debt-service coverage ratio (DSCR)" — the standard is yours to write (OCC).
- Where a numeric floor does exist, it is lower than most credit policies. SBA Procedural Notice 5000-875701 (issued 16 January 2026) requires an applicant's debt service coverage ratio to be "equal to or greater than 1.1:1" for 7(a) Small Loans (SBA).
- The Reserve Bank of India prescribes no DSCR at all. The Reserve Bank of India (Project Finance) Directions, 2025 (RBI/2025-26/59, 19 June 2025) require only that repayment be "realistically designed to factor in the initial cash flows," with no ratio attached (RBI).
- Extraction is where the inputs go wrong, not arithmetic. YuSight pulls the P&L, the debt schedule and current maturities from the source documents at 95.2% extraction accuracy against a manual benchmark, with every figure linked to its page.
- In the worked example below, one borrower prints 5.49x, 1.61x, 1.56x and 1.36x on the same audited accounts, purely from which fields the analyst filled in.
What does this calculator compute, and on which definition?
The tool computes a single-period ratio:
DSCR = Cash flow available for debt service ÷ Debt service in the same period
Everything contested sits inside those two phrases. Select one of four bases before entering anything:
Basis | Numerator | Typical use |
|---|---|---|
EBITDA | EBITDA, optionally less cash tax, unfunded capex and distributions | C&I facility agreements, mid-market term debt |
Cash profit | PAT + depreciation and amortisation + term-loan interest | Indian term loan appraisal notes, CMA-based proposals |
CFADS | Operating cash flow + interest paid − maintenance capex − cash tax | Project and infrastructure finance |
Global | Business cash flow + affiliate net cash flow + guarantor household income − living expenses | US SBA and owner-operator lending |
The default is EBITDA because it is the most common facility definition, not because it is the most conservative — it is the least. Which basis your facility actually names is set out variant by variant in every DSCR formula lenders use, and what the ratio is testing in the first place in what DSCR is, explained for commercial lenders.
What are the inputs, and where does each come from?
Every field maps to a specific line in the borrower's file. If you cannot point at the page, do not type the number.
Field | Type | Where it comes from |
|---|---|---|
Currency | Select | — |
Basis | Radio: EBITDA / Cash profit / CFADS / Global | The facility agreement's defined terms, not house habit |
Period | Select: FY / TTM / quarter annualised | The covenant's testing period |
EBITDA | Number | P&L, or operating profit plus the depreciation and amortisation note |
Profit after tax | Number (cash-profit basis) | P&L, bottom line |
Depreciation and amortisation | Number | Fixed asset note or cash flow statement, non-cash add-backs |
Operating cash flow | Number (CFADS basis) | Cash flow statement, IAS 7 / ASC 230 operating subtotal |
Cash tax paid | Number, optional toggle | Cash flow statement, "taxes paid" |
Maintenance capex | Number, optional toggle | Capex less growth capex; borrower schedule or management representation |
Distributions / drawings | Number, optional toggle | Statement of changes in equity, or partner draws |
Guarantor net income | Number (global basis) | Personal tax return, after household living expenses |
Interest expense | Number | P&L finance costs, split by facility |
Interest basis | Toggle: gross / net of interest income | The facility definition |
Current maturities of long-term debt | Number | Balance sheet current liabilities line, or the loan amortisation schedule |
Finance lease principal due | Number | Lease liability maturity note |
Capitalised interest | Number, optional | Fixed asset note |
Preferred dividends / ground rent | Number, optional (converts output to FCCR) | Facility definition |
Policy floor | Number, default 1.25 | Your credit policy |
Outputs: the ratio to two decimals; the break-even numerator at your floor; absolute cushion; and the percentage fall in cash flow that would breach the floor.
How do you read the output?
The ratio is the least useful number on the screen. Read the cushion.
A 1.61x DSCR against a 1.25x floor does not mean "36 points of comfort." It means the numerator can fall by the amount shown in the cushion line before the covenant breaks — and that percentage is what belongs in the memo. Two borrowers at 1.61x with different interest shares of debt service have materially different resilience, because interest reprices and principal does not.
If the tool returns a ratio above roughly 4x on an amortising facility, treat it as an input error rather than a strong credit. Almost always, principal is missing.
What are the three commonest input errors?
Take Corveth Packaging, FY figures in USD '000: EBITDA 4,200; depreciation and amortisation 900; gross interest 610; interest income 85; cash tax paid 640; PAT 2,135; current maturities of long-term debt 1,850; finance lease principal due 240.
Entered correctly, on an EBITDA basis with net interest:
Numerator = 4,200
Denominator = (610 − 85) + 1,850 + 240 = 525 + 1,850 + 240 = 2,615
DSCR = 4,200 ÷ 2,615 = 1.61x
1. Using EBITDA where the facility says cash profit. The Indian convention numerator is PAT + D&A + term-loan interest = 2,135 + 900 + 525 = 3,560, giving 3,560 ÷ 2,615 = 1.36x. Reporting 1.61x against a facility defined on cash profit overstates coverage by 0.25x, because EBITDA is pre-tax and cash profit is not.
2. Omitting current maturities of long-term debt. Enter interest and the lease only: 525 + 240 = 765, and DSCR reads 4,200 ÷ 765 = 5.49x. This is the error that survives review, because nothing on the P&L is missing — the omitted figure lives on the balance sheet.
3. Using gross interest where the facility defines it net. Denominator becomes 610 + 1,850 + 240 = 2,700, and DSCR reads 1.56x. Only 0.05x here, but the direction reverses on a cash-rich group with material interest income, and an unstated basis is what produces two lenders disputing the same covenant later. That dispute is dissected in covenant testing for DSCR and leverage.
The cushion at a 1.25x floor, on the correct figures:
Break-even numerator = 1.25 × 2,615 = 3,269
Cushion = 4,200 − 3,269 = 931
Tolerable decline = 931 ÷ 4,200 = 22.2%
Corveth can lose 22% of EBITDA before it breaches. That sentence belongs in the memo; "DSCR 1.61x" does not, on its own.
FAQ
How do you calculate the debt service coverage ratio?
Divide cash flow available for debt service by debt service for the same period. The arithmetic never changes; what changes is which cash flow measure and which debt items your facility agreement names, so read the defined terms before you divide.
What is a good DSCR ratio for a business loan?
Most commercial credit policies set the floor between 1.20x and 1.35x for amortising term debt. The SBA's own written minimum for 7(a) Small Loans is 1.1:1, which is lower than nearly every lender applies — the higher number is your policy, not the rulebook.
Does the calculator handle interest-only periods?
Yes. Leave current maturities and lease principal at zero and the denominator is interest alone, which is what an interest-only or moratorium period actually costs. Treat the resulting ratio as an interest cover figure and exclude it from any tenor average.
Which DSCR basis should I select?
The one your facility agreement defines. If you are sizing a new facility and nothing is drafted yet, run EBITDA and CFADS side by side — the gap between them is the capex and tax the EBITDA number is ignoring.
Should I use annual or quarterly figures?
Use whatever period the covenant tests. Annualising a single strong quarter is the most common way a seasonal borrower passes a test it would fail on a trailing-twelve-month basis.
Where do I find current maturities of long-term debt?
On the balance sheet, inside current liabilities, usually as "current portion of long-term debt." If the borrower nets it into a single borrowings line, take it from the loan amortisation schedule instead and note in the file which source you used.
Does DSCR include working capital facility interest?
It depends on the definition. The Indian cash-profit convention adds back only term-loan interest and leaves cash credit interest inside PAT; an EBITDA-basis covenant usually captures total finance costs. Mixing the two understates the denominator.
Can one borrower have more than one correct DSCR?
Yes, and usually does. A single set of accounts supports a business DSCR, a global DSCR and a facility-specific DSCR at the same time, all correct, all different. Label every one with the basis used.
Key takeaways
- Pick the basis before you enter a number. EBITDA, cash profit, CFADS and global answer different questions and are not comparable across borrowers.
- The denominator is where files break: current maturities of long-term debt and finance lease principal are on the balance sheet, not the P&L.
- Report the cushion — the percentage fall in cash flow that breaches your floor — not just the ratio.
- A single-year DSCR hides the year that fails. On a term loan, run the whole schedule and read average DSCR versus minimum DSCR before you quote an average.
- For owner-operator and SBA files, the business ratio is not the test. See how global DSCR is calculated for SBA 7(a) loans and global cash flow analysis software compared for US lenders.
Every input above has to come off a document before it can be typed into a box. That extraction — audited statements, debt schedules, tax returns — is what financial spreading does, and it is where the errors originate.
Watch YuSight spread a real balance sheet and see the DSCR computed with each figure traced to its source page.
