Business Loan Affordability Calculator
Find out how much your business can borrow based on cash flow and DSCR
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Borrow up to $500,000+
Business Loan Affordability Calculator
How Much Can Your Business Borrow?
DSCR = Net Operating Income / Total Annual Debt Service. Lenders use DSCR to determine if your business generates enough cash flow to cover existing and new debt payments with a safety margin.
Key Takeaways
- A business with $500,000 in annual revenue and $380,000 in operating expenses has $120,000 in net operating income (NOI), supporting approximately $148,000 in new borrowing at 10% APR for 5 years with a 1.25x DSCR.
- DSCR (Debt Service Coverage Ratio) is the single most important metric lenders evaluate. It measures how many times your net operating income covers your total debt payments. Most lenders require 1.25x minimum; SBA loans require 1.15x.
- The calculator works backwards from your cash flow: instead of asking “how much does this loan cost?” it answers “how much can I safely borrow?”
- The three-scenario comparison shows conservative (1.50x), standard (1.25x), and aggressive (1.10x) borrowing levels — helping you choose between safety margin and maximum capital.
- Existing debt payments reduce your borrowing capacity dollar for dollar. Paying off a $1,500/month obligation immediately increases your maximum new loan by approximately $15,000–$20,000.
How to Use This Calculator
This calculator determines the maximum loan amount your business can afford based on actual cash flow, not just credit score. It uses the same DSCR methodology that lenders use in underwriting.
Step 1 — Enter annual gross revenue. This is your total top-line revenue for the most recent 12 months. Use your tax return or profit-and-loss statement for accuracy. Lenders will verify this number during underwriting.
Step 2 — Enter annual operating expenses. Include all operating costs except existing debt payments: payroll, rent, utilities, inventory, insurance, marketing, supplies. Exclude depreciation, amortization, and interest — lenders add those back when calculating cash flow. The difference between revenue and expenses is your net operating income (NOI).
Step 3 — Enter existing monthly debt payments. Sum all current loan payments, lease obligations, and credit line draws. This is critical because lenders look at total debt service — existing plus the new loan — when calculating DSCR.
Step 4 — Set loan parameters. Enter the APR you expect (10% is a reasonable starting point for established businesses), choose a term, and set your target DSCR. The default of 1.25x is the standard lender threshold. Lower DSCR means you can borrow more but with less safety margin; higher means more conservative borrowing.
Understanding the Results
The hero number is the maximum loan amount your business can afford while maintaining the target DSCR. This is not the maximum a lender will approve — lenders also consider credit score, time in business, collateral, and industry — but it is the cash-flow-based ceiling that most underwriting starts with.
The DSCR gauge shows where your coverage ratio falls on a gradient from risky (red, below 1.0x) to strong (dark green, above 2.0x). A DSCR below 1.0x means your income does not cover your debt — no lender will approve this. Between 1.0x and 1.25x is technically viable but risky. Above 1.25x is where most approvals happen.
The three scenario cards at the bottom are the decision tool. They show the maximum loan at three DSCR levels: conservative (1.50x) gives the most safety margin, standard (1.25x) is the typical lender threshold, and aggressive (1.10x) is the absolute minimum for SBA loans. The card matching your target DSCR gets a green highlight. Comparing all three helps you decide how much risk to take on.
DSCR Requirements by Lender Type
| Lender Type | Min DSCR | Typical Rate | Notes |
|---|---|---|---|
| SBA 7(a) | 1.15x | 9%–10% | Lowest DSCR threshold of any major program |
| Bank Term Loan | 1.25x–1.50x | 8%–13% | Stricter underwriting, best rates for strong DSCR |
| Online Lender | 1.10x–1.25x | 10%–30% | Faster approval, higher rates, more flexible DSCR |
| CRE/Commercial Mortgage | 1.25x–1.35x | 7%–10% | Property income often evaluated separately |
| Equipment Financing | 1.15x–1.25x | 6%–15% | Equipment serves as collateral, reducing DSCR requirement |
Frequently Asked Questions
What is DSCR and why does it matter?
DSCR (Debt Service Coverage Ratio) measures how many times your business’s net operating income covers all debt payments. A 1.25x DSCR means your income is 1.25 times your total debt payments — leaving a 25% safety margin. Lenders use this as the primary indicator of whether your business can handle loan payments alongside existing obligations.
How much business loan can I afford?
The answer depends on your net operating income, existing debt payments, the loan rate, and term. A business with $120,000 annual NOI and $18,000 in existing annual debt payments can afford approximately $148,000 in new borrowing at 10% for 5 years at a 1.25x DSCR. Use the calculator above with your actual numbers for a personalized estimate.
What if my DSCR is below 1.25x?
Some lenders will approve loans at a DSCR as low as 1.10x (SBA requires 1.15x minimum), though rates will be higher. If your DSCR is below 1.0x, no traditional lender will approve a new loan. Strategies to improve DSCR: increase revenue, cut operating expenses, pay down existing debt, or extend the loan term to reduce monthly payments.
Does this calculator account for my credit score?
No. This calculator focuses purely on cash flow capacity. In practice, lenders also evaluate credit score (typically 650+ for SBA, 680+ for banks), time in business (2+ years preferred), collateral, and industry risk. A strong DSCR with a weak credit score, or vice versa, may still result in a decline. See our business loans comparison for lenders by credit tier.
Should I borrow the maximum the calculator shows?
Not necessarily. The maximum represents what you can afford at the target DSCR, but borrowing less preserves a larger cash flow buffer for unexpected expenses, seasonal revenue dips, or growth investments. Many financial advisors recommend borrowing at 1.50x DSCR or higher for businesses with variable revenue. The scenario cards above show the difference between conservative, standard, and aggressive borrowing levels.
How do seasonal businesses calculate affordability?
Use your annual totals, not your best or worst months. Lenders annualize your revenue and expenses. If your revenue varies dramatically by season, consider using your most recent tax return rather than projecting from a strong quarter. Some lenders also require 6–12 months of bank statements to verify cash flow consistency.
References & Further Reading
Keep Reading
- Best Business Loans — Compare lenders by rate and requirements
- SBA Loan Calculator — Full payment estimate for a specific SBA loan
- Business Loan Calculator — General business loan payment calculator
- Prime Rate Loan Calculator — For prime-based variable rate loans
- All PrimeRates Calculators