What is DSCR and what is a good ratio?

Debt Service Coverage Ratio = Net Operating Income / Total Annual Debt Payments. A ratio of 1.0 means you exactly cover payments with no cushion. Most lenders require 1.25+; banks typically want 1.35+. Higher is better — it means you have comfortable headroom above your debt obligations.

What's the difference between an SBA loan and a conventional business loan?

SBA loans are partially guaranteed by the federal government, allowing lenders to offer lower rates and longer terms to businesses that might not qualify for conventional loans. They're slower to close and require more documentation, but often have the best terms available for small businesses.

What fees should I expect on a business loan?

Common fees include origination fees (0.5–3% of loan amount), SBA guarantee fees (0.5–3.5%), packaging fees, and prepayment penalties. Always calculate the APR including all fees — not just the stated interest rate.

How does loan term affect my business's cash flow?

Longer terms mean lower monthly payments but higher total interest. A $100,000 loan at 8% over 5 years costs $24,320 in interest; over 10 years it costs $49,800 in interest — more than double. Choose the shortest term your cash flow can comfortably support.

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Can Your Business Actually Afford This Loan?

Can your business afford this loan?

What This Does

Taking on debt to grow a business can be one of the best investments you make — or one of the fastest ways to kill a profitable company. The difference lies in whether your business generates enough cash flow to comfortably service the debt while still covering operations, payroll, and unexpected costs. That's what this calculator helps you determine. Lenders evaluate business loans using the Debt Service Coverage Ratio (DSCR): your net operating income divided by total annual debt payments. A DSCR below 1.0 means your business doesn't generate enough cash to cover its debt — which means default risk. Most lenders require a DSCR of at least 1.25, meaning you earn 25% more than needed to service the debt. Banks typically want 1.35 or higher. This calculator goes beyond just computing your monthly payment. It shows your true all-in cost including fees, calculates your DSCR based on your business income, flags whether lenders are likely to approve the loan, and models a break-even revenue threshold — the minimum monthly revenue your business needs to sustain this loan alongside existing obligations. Use it before applying so you can negotiate from a position of clarity.

When Should You Use This?

→Evaluating whether to take on a business loan before applying
→Calculating monthly payment and total interest on an SBA or commercial loan
→Understanding your DSCR and whether it meets lender minimums
→Modeling what revenue level your business needs to support new debt
→Comparing loan offers with different terms, rates, and origination fees

Example Scenario

Marco's landscaping business earns $18,000/month in net operating income. He's considering a $120,000 equipment loan at 7.5% over 60 months. Monthly payment: $2,402. Annual debt service: $28,824. DSCR: 18,000 × 12 / 28,824 = 7.49 — well above the 1.25 threshold. Total interest: $24,120. Marco proceeds with the loan, confident the equipment will increase revenue by more than the monthly payment.

Business Loan Calculator

Monthly Payment · DSCR · Effective APR · Amortization · Rate Sensitivity

Results update in real time as you adjust any input.

Loan Details

Loan Amount

Annual Interest Rate

SBA: 6–9% · Bank: 6–12% · Online: 9–25%+

Loan Term

36 = 3yr · 60 = 5yr · 84 = 7yr · 120 = 10yr

Origination Fee (%)

Typical: 0–3% · Ask lenders to waive or reduce

Business Financials (for DSCR)

Monthly Revenue

Gross Margin (%)

Existing Monthly Debt

About This Calculator

This business loan calculator computes monthly payment, total interest, effective APR (including origination fee), and Debt Service Coverage Ratio (DSCR) for small business term loans. DSCR is calculated as Annual NOI (monthly revenue × gross margin × 12) divided by total annual debt service (this loan + existing monthly obligations × 12). The effective APR is solved via binary search to find the discount rate that equates the present value of all payments to the net proceeds received after the origination fee. All results update in real time across all seven inputs.

The Amortization tab renders a stacked area chart of cumulative principal (accent) and interest (red) over the full loan term, and a line chart of remaining balance over time — both illustrating the front-loaded interest structure of standard amortising loans. A first-12-months detail table shows exact principal, interest, and balance by month. The Pay Faster tab shows a bar chart of interest saved at four extra payment levels ($0 baseline through $1,000/month extra), plus a full payoff strategies table with months saved. The Rate Impact tab shows a line chart of monthly payment across 8 rate scenarios (5%–18%) and a bar chart of DSCR at each rate, with reference lines at the 1.0 minimum and 1.25 lender target.

Loan score (0–100) weights DSCR most heavily (35 points), then interest rate competitiveness (30 points), term length (20 points), and origination fee level (15 points). Dynamic accent: emerald (Strong Terms ≥80), indigo (Manageable ≥65), amber (Caution ≥45), orange (High Risk ≥25), red (Avoid). Risk flags auto-trigger for DSCR below 1.25, payment-to-revenue ratio above 15%, origination fee above 2%, and interest rate above 12%. The DSCR gauge visually shows position relative to the 1.0 minimum and 1.25 lender target thresholds. All four insights and four What To Do Next steps adapt to three DSCR tiers.

Results are estimates only and do not constitute financial, tax, or legal advice. Always consult a qualified professional before making financial decisions.