"How to use the free DSCR Calculator (and what the number means)"
How to use the free DSCR Calculator (and what the number means)
Tool: DSCR Calculator
Before most lenders dig into your full package, they want a clean answer to one question: does the business throw off enough cash to cover the debt you already have plus the loan you want.
That answer is DSCR. Debt Service Coverage Ratio.
You can run it yourself in a few minutes with our free calculator. No account required. Educational only. It will not approve or deny anything. It shows you where you stand on paper so you walk into the real conversation prepared.
What DSCR is
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service
- NOI is roughly your operating cash after normal expenses. On the calculator that is gross revenue plus other income, minus operating expenses.
- Annual debt service is the total principal and interest you pay in a year on existing loans, plus the payment on the loan you are modeling.
If DSCR is below 1.0, cash flow is not covering debt service on paper. Around 1.25 is a common SBA-style floor many owners hear about. 1.50 and higher is usually read as a stronger position. Those bands are educational. Your lender sets the real bar for your deal, your industry, and the structure they will accept.
How to use the calculator
Open zero2ten.biz/calculator.
You will enter four inputs:
- Gross revenue: total annual business revenue before expenses
- Other income: rental, investments, or other cash that belongs in the picture
- Operating expenses: rent, payroll, supplies, the real cost to run the business
- Annual debt service: what you already pay each year, plus the annual payment on the new loan you are testing
Use real numbers from your books when you have them. A solid estimate is fine for a first pass. The point is direction, not theater.
The page shows the breakdown live: revenue, other income, expenses, NOI, debt service, and the DSCR result with a simple band (for example Excellent around 1.50+).
A worked example (defaults on the page)
| Input | Amount |
|---|---|
| Gross revenue | $500,000 |
| Other income | $25,000 |
| Operating expenses | $350,000 |
| Annual debt service | $100,000 |
NOI = 500,000 + 25,000 − 350,000 = $175,000
DSCR = 175,000 ÷ 100,000 = 1.75
That is a healthy educational result. Slide the debt service up and watch the ratio fall. That is the whole point: pressure-test the ask before you spend weeks on a package.
What to do with the result
If the number looks strong
You still need a clean package, accurate statements, and a clear use of funds. DSCR is one gate, not the whole file. Start gathering documents early so the rest of the process does not stall.
If the number is soft or under 1.0
Do not panic-shop expensive capital. Work the inputs you control:
- Can operating expenses be cleaned up or better explained (one-time costs vs. run rate)?
- Is the loan amount or term creating a payment the cash flow cannot support?
- Is revenue seasonality making a single annual snapshot misleading? Bring the story, not just the average.
- Are there existing debts you should refinance or pay down before adding new debt service?
Knowing early is the win. Owners who wait until they are desperate take worse options or get a no with no roadmap. Owners who check DSCR first walk in knowing the math.
What this tool is not
- Not a lender decision
- Not an SBA approval
- Not financial advice
- Not a promise of terms, rates, or funding
It is a free clarity tool so Main Street owners can speak the same language the credit file will use.
Related free tools
- Loan Payment Calculator: monthly payment, amortization, true cost of borrowing
- Lending Readiness Assessment: 14 questions, about five minutes, personalized report
- SBA Eligibility Checker: seven questions that screen big SBA disqualifiers (educational only)
Run your DSCR: https://www.zero2ten.biz/calculator
If you want help getting the rest of the house in order after you know the number, early access to Zero2Ten is open at zero2ten.biz.
Related reading
"Business loan for a sole proprietor: your personal package is the file"
For sole proprietors, you and the business are one credit story. Build personal returns, PFS, credit, and cash flow into one matching package.
"How to qualify for a business loan before you prequalify"
Qualifying is capacity plus a matching file, not a soft-pull score. Get cash flow, credit, and documents straight before you prequalify.
Business loan requirements: what banks need (and why it has to match)
Business loan requirements are more than a checklist. Here's what lenders ask for, why numbers must match, and how to prep one clean file.
How to get a business loan: the readiness path before you apply
How to get a business loan without burning weeks on rework. Know need vs capacity, gather the right documents, and talk to lenders when you are ready.