Debt service cover (DSCR) calculator

The debt service cover ratio compares the cash your company generates with what it must pay lenders. This calculator uses annual EBITDA divided by total annual loan repayments, capital and interest. A ratio of 1.0× means profits only just cover repayments; 1.5× means there is 50% headroom.

Many lenders look for 1.25× or more, though each lender and product sets its own test. Below 1.0× means profits do not cover repayments, which most lenders will not accept. A higher ratio leaves more room for a quieter year or a rise in costs.

Interest cover compares profit, usually EBIT or EBITDA, with interest only. DSCR compares it with interest and capital repayments together, so it is the stricter test of whether a company can actually meet its loan repayments. A company can have strong interest cover but weak DSCR if its loans are repaid over a short term.

Earnings before interest, tax, depreciation and amortisation: a rough measure of the cash profit available to service debt. Lenders often adjust it, for example adding back one-off costs or deducting directors’ drawings above normal salary, so their figure may differ from yours.

Usually the most recent filed accounts, often supported by up-to-date management accounts and bank statements. For growth funding, some lenders also look at credible forecasts, but they usually want to see that the existing business already covers its current repayments.

Borrow over a longer term, refinance expensive short-term debt, reduce the amount borrowed or improve profitability. Each changes the ratio in a different way: a longer term lowers annual repayments but usually raises total interest. Try different terms in the calculator.

No. Lenders also look at bank statements, existing commitments, Central Credit Register records, security, tax clearance and the purpose of the loan. Short-term and card-based lenders often rely more on recent bank statements or card takings than on annual profit.