If so, you are in the right place! Get started by entering your personal confirmation number below.
Received an offer from us?
If so, you are in the right place! Get started by entering your personal confirmation number below.
Leaving SoFi Website
You are now leaving the SoFi website and entering a third-party website. SoFi has no control over the content, products or services offered nor the security or privacy of information transmitted to others via their website. We recommend that you review the privacy policy of the site you are entering. SoFi does not guarantee or endorse the products, information or recommendations provided in any third party website.
DSCR Calculator: Calculate Debt Service Coverage Ratio
By Caren Weiner | Updated April 1, 2026
One metric commonly used to express a company’s level of financial stability is its debt service coverage ratio (DSCR). This ratio compares the business’s annual operating income to the total amount it has to pay out each year to cover its debts.
It’s easy to understand why a company’s survival requires more income than outflow, but identifying which earnings and expenses to include in the equation can sometimes be tricky. SoFi’s debt service coverage ratio calculator can help you zero in on those figures and show you how they fit together to generate this important ratio.
Key Points
• The debt service coverage ratio calculator helps entrepreneurs and lenders estimate how easily a small business can pay its debts.
• The debt coverage calculator can indicate whether a company’s incoming cash flow is enough to service its outstanding loans.
• The DSCR can also guide commercial real estate lenders as they assess whether a borrower is likely to earn an adequate return on investment.
• To get the best results from the DSCR calculator, it’s useful to have all the necessary financial information in one place for easy reference.
How to Use SoFi’s DSCR Calculator
The information you’ll need to calculate your business’s DSCR is simple, though you may need to look at a variety of sources to find it. The best place to start is with your company’s accounting documents, including its profit and loss statement (also called the income statement), recent tax returns, balance sheet, and cash flow statement. Some information may be shown in your business checking account records.
At every step of the process, you can input your information into the debt service ratio calculator by either typing it into the text box or using the slider.
Annual Income (Cash Flow)
The first section of the calculator deals with the business’s annual cash flow.
Step One: Enter The Annual Net Operating Income (NOI)
Your company’s income statement typically lists its NOI. The NOI represents your business’s total income minus its total operating expenses.
Step Two: Include Depreciation and Amortization Amounts
These non-cash expenses are tax deductions that you can add back into your business income for DSCR purposes. You can find these numbers in the business’s most recent tax return, typically on IRS Form 4562, Depreciation and Amortization.
Step Three: Add Any Further Cash Infusions or Contributions
Any additional capital contributions from LLC members or corporate shareholders — such as cash, equipment, or intellectual property — would go in this section of the debt service ratio calculator. Records of those amounts should be in your accounting ledger and possibly in the LLC’s operating agreement.
Annual Debt Service
The second part of the calculator deals with your company’s management of its debt. Debt service includes principal and interest payments on small business loans and mortgages, lease installments, and any other debt repayments that are required for the year.
Step Four: Enter Your Company’s Annual Principal and Interest Payments
This entry in the debt service ratio calculator should encompass all the payments you make toward outstanding business debts in the course of a year. Include mortgage payments, installments on startup business loans, and other debt service.
Step Five: State the Business’s Total Lease Payments Per Year
Business owners sometimes find it cost-effective to lease certain kinds of equipment. Some common examples are delivery vehicles, construction machinery, medical devices, office tech, kitchen equipment, manufacturing tools, and more. Lease payments for items like these should be represented in this section.
Step Six: Indicate Any Other Debt Obligations
If your company has other loans or financial commitments involving monthly or annual outlays, total up one year’s worth of payments for those. (Money you shell out to pay down your small business credit card might be one example.) Put the sum in the calculator’s Other Debt Obligations section.
Grow Your Business the Right Way. Explore small business funding options in one place with no impact to your credit score.*
Once you’ve input all of these figures into the calculator, the tool will show you the resulting DSCR. A number greater than 1 means that your business has enough net operating income to cover its bills. If you’re applying for a loan, bear in mind that lenders generally prefer a DSCR of 1.25 or higher.
DSCR Formula and What Counts in the Inputs
The formula used for calculating DSCR is:
DSCR = Net operating income / Total debt service
These two numbers form the core ratio that shows how comfortably a business can pay its debts. (Details about how to get NOI and total debt service figures are in the calculator instructions above.)
What Can Impact Debt Service Coverage Ratio
The DSCR is a composite measure calculated from NOI and total debt service. As indicated by the calculator, each of these elements is also a composite measure. Net operating income is the amount that a business brings in over the course of a year, minus its cost of operations. Total debt service is the sum of all the business’s loan, lease, and mortgage payments for a year.
So a business owner could change one or more underlying factors and see a different DSCR result.
How to Improve DSCR
If a business needed to strengthen its DSCR, it would either increase its net operating income or reduce its total debt service. Possible adjustments could involve:
• Increasing NOI
◦ Boosting prices on your products or services in order to increase revenue
◦ Introducing new income streams that require little overhead, such as service fees
◦ Securing additional cash contributions
◦ Identifying and maximizing tax benefits to preserve cash flow
• Decreasing operating costs
◦ Downsizing staff to cut payroll
◦ Changing suppliers to get lower prices on raw materials
◦ Relocating your business to a cheaper workplace or region
• Reducing debt service
◦ Refinancing or extending loans
◦ Selling non-essential assets to pay off high-interest, short-term debt
DSCR vs Other Metrics Lenders Use
The DSCR is one of several similar “coverage ratios” that lenders and other financial partners use to assess a business’s creditworthiness and financial leverage. Others include the debt-to-income (DTI) ratio, the fixed charge coverage ratio (FCCR), and the debt-to-equity (DTE) ratio.
DSCR, DTI, and FCCR focus on the company’s cash flow; DTE focuses on the structure of its balance sheet.
Key Financial Ratios
Ratio
Financial Aspect Measured
Formula
Desired Result
Debt service coverage ratio
Ability to cover principal and interest payments using operating profits
Net Operating Income (NOI) / Total Debt Service
> 1.25
Debt-to-income ratio
Personal and global financial burden (including owner’s ability to meet personal guarantees)
Monthly Debt Payments / Gross Monthly Income
< 36% for most lenders
Fixed charge coverage ratio
Ability to meet all fixed obligations, including rent and leases
(EBIT + Fixed Charges Before Taxes) / (Interest + Fixed Charges Before Taxes)
> 1.25
Debt-to-equity ratio
Owner leverage and lender risk (i.e., how much is the business financed by creditors vs. its owners?)
Total Liabilities / Shareholders’ Equity
1.0 to 1.5 depending on the industry
When to Use a DSCR Calculator
DSCR is a convenient shorthand for expressing a business’s solvency and its ability to manage its debt. It can be a useful metric for internal purposes, such as monitoring overall costs, or for external ones, such as discussions with potential lenders. No matter why you’re doing the computation, a simple and convenient DSCR ratio calculator makes it easy to run the numbers whenever needed.
Explore Business Financing Options
A debt coverage calculator should provide you with a clearer sense of whether your business can manage additional debt, and if so, how much. Also, as part of your analysis, it’s wise to look at a few other factors:
• Best loan type for your type of business. Not all lenders work within every industry. For example, owners of gambling-related ventures, real estate investment firms, or strip clubs are barred from taking out Small Business Administration (SBA) loans. (For more on these government-sponsored loans, check out our SBA loan calculator.)
• Length of loan term. Longer loans tend to have smaller monthly payments but more of them. This generally means you’d pay more total interest over the life of the loan. With SoFi’s business loan calculator, you can input various combinations of principal, interest, and loan terms to compare total repayment costs.
• Speed of funding. If there’s no big rush, you may have time to negotiate a lower rate or a less expensive loan. If you need money sooner, a business line of credit can provide faster access to funds.
• Additional loan costs. Beyond interest rates and monthly payments, other costs — such as fees or penalties — may apply.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
With one simple search, see if you qualify and explore quotes for your business.
A DSCR calculator is a tool you can use to compare a company’s operating income to its debt payments. It creates a ratio that indicates how much financial leeway the company has in paying its bills.
How do I calculate DSCR?
The debt service coverage ratio formula is:
DSCR = Net operating income / Total debt service
Net operating income, often called NOI, is all the money a business brings in over the course of a year, minus its cost of operations. Total debt service is the sum of all the business’s loan, lease, and mortgage payments for a year.
What counts as debt service in a debt service coverage ratio calculation?
Debt service includes:
• The total you pay each year in both principal and interest on your business loans and mortgages
• The annual total of your lease payments for property and equipment
• Principal and interest payments for any other debts on your books
What is a good DSCR?
Lenders generally consider a DSCR of 1.25 or higher to be healthy, though the rule-of-thumb figure may vary by industry. A healthy ratio communicates to a company’s counterparties that the business isn’t likely to default on its debts or go bankrupt.
How can I improve my DSCR?
Cost-cutting is one way to improve your ratio. That might include:
SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SOSMB-Q425-096
Search business financing options in minutes.
Your time matters. That’s why we made it fast and easy to look for business line of credit quotes in minutes.
