DSCR Calculator
Can the business actually service this loan? Debt Service Coverage Ratio is the number a lender checks before and after lending — and the covenant a borrower has to keep meeting for the life of the loan.
DSCR & Interest Coverage calculator
Debt Service Coverage Ratio and Interest Coverage Ratio — two of the ratios a lender checks against a loan covenant.
Educational illustration only, not lending or investment advice. 1.25x is a commonly cited minimum DSCR in term-loan agreements, not a universal rule — actual covenant thresholds are set by the specific lender and loan agreement.
The two formulas
DSCR = EBITDA ÷ Total Debt Service (interest + principal due this period). Lenders use EBITDA rather than net profit because depreciation and amortization are non-cash charges — they reduce profit but not the cash actually available to pay debt. Interest Coverage Ratio = EBIT ÷ Interest Expense — the older, narrower ratio that only looks at interest, using EBIT (profit after depreciation) rather than EBITDA.
Why covenants exist
A loan covenant sets a minimum DSCR the borrower must maintain, checked at each reporting period — commonly annually or quarterly. Falling below it is usually a technical default even if every instalment has been paid on time, giving the lender an early warning and a chance to intervene before an actual missed payment.
Educational illustration only, not lending or investment advice. Actual covenant definitions vary by lender and loan agreement — some use slightly different numerators or denominators than shown here.
Get the full amortization schedule in Excel
Download a real workbook with a full monthly loan schedule and a multi-year DSCR covenant check built directly from it.