Business Loan Payment and DSCR Calculator

By the 15minuteplan.ai team · Facts checked 2026-10-14

Enter a loan amount, interest rate and term, plus your yearly operating cash flow. The calculator returns the monthly payment and your debt service coverage ratio (DSCR) on one screen. DSCR is operating cash flow divided by annual debt service, so 1.00 means your cash flow equals your loan payments.

SBA Procedural Notice 5000-876777 (effective 2026-03-01) sets a DSCR line of 1.10:1 for 7(a) Small loans of $350,000 or less. Many lenders quote 1.25 as a rule of thumb. That figure is not an SBA rule, and each lender sets its own.

Calculator

What each field means

The defaults ($150,000, 10%, 10 years, $60,000 of cash flow) are placeholders, not typical figures. At the defaults the DSCR is 2.52: a payment of $1,982.26 a month against $60,000 of cash flow.

What the result means

The verdict follows the DSCR the tool calculates, before rounding.

The 1.10:1 line is written for 7(a) Small loans. For a loan above $350,000 the tool shows no SBA line and tells you to ask your lender what it requires.

The tool tests the unrounded DSCR, so a result of 1.0997 counts as below 1.10 even though it displays as 1.10. When a DSCR is that close under a line, the tool shows four decimals and a note. Your lender may round differently.

A high DSCR is not an approval. The tool never says you qualify.

How the numbers are calculated

Formulas recomputed twice and checked against four independently recomputed payments, 2026-10-14. SBA notice read 2026-10-12.

The tool keeps every value unrounded while it calculates and rounds only what it displays: money to the cent, DSCR to two decimals. The largest loan is rounded down to the cent.

r (monthly rate)      = APR / 100 / 12
monthly payment       = loan x r / (1 - (1 + r)^-n)        n = number of monthly payments
                        (at 0% interest: loan / n)
interest-only payment = loan x r                           months 1 to k
payment after that    = loan x r / (1 - (1 + r)^-(n - k))  months k+1 to n
annual debt service   = 12 x payment + other debt per year
DSCR                  = operating cash flow / annual debt service
cash flow needed      = target DSCR x annual debt service
largest loan          = m x (1 - (1 + r)^-(n - k)) / r
                        where m = (cash flow / target - other debt per year) / 12
stressed cash flow    = cash flow - revenue x sales drop x share that reaches cash flow
sales drop to a line  = (cash flow - line x debt service) / (revenue x share)

The payment formula is the standard amortization formula, so we credit no agency. We checked it against four payments we recomputed independently: $10,000 at 7% over 30 months gives $364.32, $50,000 at 5% over 10 years gives $530.33, $25,000 at 10% over 60 months gives $531.18, and $150,000 at 11% over 10 years gives $2,066.25.

Assumptions

1. The rate is fixed for the whole term. You type a yearly percentage, and the tool divides it by 12.
2. Payments are equal and monthly, and interest is charged each month on the outstanding balance.
3. Debt service is 12 months of payments on the new loan plus the other business debt payments you enter. Nothing else is added.
4. There are no fees, no balloon payment and no prepayment.
5. Cash flow stays flat over the term, except in the stress test.
6. Operating cash flow is the yearly figure you type, before debt payments.
7. The numbers you type stay in your browser. The page records only that the calculator was used, never amounts.

Which cash flow figure to enter

The SBA notice defines the pieces this way. Debt service coverage is "measured by dividing the operating cash flow (OCF) by the debt service (DS)." Operating cash flow "is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA)." The notice adds: "Lenders may make additions and subtractions to OCF." Debt service is "the future required principal and interest payments on all business debt, inclusive of new SBA loan proceeds." (SBA Procedural Notice 5000-876777.)

EBITDA is net income plus interest, taxes, depreciation and amortization. You can build it from your profit-and-loss statement or tax return. A lender's formula can differ; enter the lender's cash-flow figure.

Ridgeline Mobile Welding (the worked example below) builds its $56,000 from these invented lines:

Ask the lender whether it subtracts the owner's pay before it tests coverage.

Edge cases that change the answer

With an interest-only period, the headline DSCR uses the higher payment after the interest-only months. That is the conservative reading. The DSCR during the interest-only months is shown beside it. The largest loan is sized on the same higher payment.

Worked example: Ridgeline Mobile Welding, a fictional business

Ridgeline Mobile Welding LLC is fictional. All inputs are invented, and the rate is an assumption: not a rate quote and not an SBA cap. We recomputed every step below twice on 2026-10-14.

Step 3 multiplies the unrounded payment. Twelve times the rounded $3,034.92 would give $36,419.04, one cent less. Steps 15 and 16 use the unrounded monthly room, so the printed room, multiplied by hand, lands a few cents off.

Same loan over other terms:

The point: a loan that clears 1.10 on today's cash flow can miss it after a small sales drop, and an interest-only year hides the payment that comes after it.

Thresholds, with source and date

Each row names whose rule it is, where we read it and when.

Confirm every line with your lender.

The 1.10:1 text reads: "For 7(a) Small Loans, the Applicant's debt service coverage ratio must be equal to or greater than 1.10:1 on either a historical or projected basis." If an applicant misses it, the notice sends the loan to the procedures for Standard 7(a) or SBA Express loans.

The SBA states other terms on its 7(a) loans pages: the maximum 7(a) loan is $5 million, and most 7(a) term loans are repaid with monthly principal and interest payments from the business's cash flow. Your lender sets the rate, within the SBA's maximum rates for 7(a) loans (not shown here), so the tool takes any rate you type. See the SBA 7(a) loans page.

How to raise a low DSCR

Start from the Ridgeline loan over 5 years instead of 7. Payment is $3,868.90. Annual debt service, with the $7,800 of other debt, is $54,226.82. DSCR is 1.03: above 1.00, under 1.10 and under 1.25. Cash flow needed for 1.10 is $59,649.51, a shortfall of $3,649.51 a year, or 6.52% of the $56,000 entered. Each row below changes one input and leaves the rest alone.

A longer term lowers the payment and raises total interest. The SBA's 7(a) terms page gives a maturity of 10 years or less, unless the loan finances or refinances real estate or equipment with a useful life over 10 years; real estate can reach 25 years including extensions. The tool's 360-month cap is the tool's own limit, not an SBA limit. The tool shows what each change does to DSCR. It does not tell you whether a lender will accept the change.

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Related pages

• SBA loan business plan template: what lenders check in a plan, with a different DSCR example.
• AI business plan generator: the generator behind the button above.
• SBA 7(a) loans: the SBA's own page.