Is DSCR the only thing a lender looks at?

No. DSCR is one of several signals. Lenders also weigh trading history, sector risk, security, director credit profile, working-capital cycle and concentration of customers. A strong DSCR does not predict approval; a weaker one does not predict refusal.

Should I use pre-tax or post-tax income?

Conventionally DSCR uses net operating income — revenue after operating costs but before financing costs and corporation tax. That keeps the ratio focused on operating cash generation rather than how the business is funded.

Why is 1.25 a common threshold?

It gives the business a 25% cushion above its debt obligations to absorb a bad month, a late payer or a small cost step-change. Some sectors and term-loan products look for higher cover; some asset-backed lenders accept lower if security is strong.

Calculator · Affordability metric

Debt service cover ratio calculator

Debt service cover ratio (DSCR) is the standard yardstick lenders use to ask one simple question: does the business generate enough operating income each month to cover its debt repayments, with sensible margin? It is net operating income divided by debt service. This calculator works out the ratio for you and gives an educational interpretation band so you can sense-check where your numbers sit before applying.

Monthly net operating income

Revenue after operating costs but before financing costs and tax.

Monthly debt service

Combined monthly principal + interest across all business borrowings, including any new facility you are sizing up.

Indicative outputs

DSCR (NOI / debt service): 1.67
Monthly surplus after debt: £8,000

1.25 or above — comfortable

Income covers debt with a sensible buffer. Many lenders use 1.25 as a working threshold; some sectors and term-loan products look for 1.4 or higher.

Educational interpretation only. DSCR is one of several signals a lender weighs alongside trading history, security, sector and credit profile. A comfortable ratio is not an approval predictor; a tight ratio is not a refusal.

How to read the bands

Under 1.0 — cashflow does not cover: Operating income is below the debt service you owe. Most mainstream UK lenders treat this as a hard signal to revisit the affordability case; specialist or secured lenders may still look at it but typically want strong collateral.
1.0 to 1.25 — tight: Income covers debt, but there is little headroom for trading dips, late payers or cost step-changes. Lenders often view this band as borderline and may underwrite with conditions.
1.25 and above — comfortable: A 25% buffer above debt service is a common working threshold. Some sectors and term-loan products look for 1.4 or higher; some asset-backed products accept lower where security is strong.

Assumptions and limits

Single-month snapshot. Real DSCR is usually averaged over 3 or 12 months to smooth seasonality.
Net operating income is taken as you enter it — the calculator does not deduct tax, depreciation or director drawings.
Debt service must include all monthly principal and interest across every borrowing the business holds, including any new facility being modelled.
The interpretation bands are educational. Different lenders, products and sectors use different thresholds.
Indicative only. A specific lender's underwriting view depends on factors well beyond DSCR.

FAQs

Is DSCR the only thing a lender looks at?: No. DSCR is one of several signals. Lenders also weigh trading history, sector risk, security, director credit profile, working-capital cycle and customer concentration. A strong DSCR does not predict approval; a weaker one does not predict refusal.
Should I use pre-tax or post-tax income?: Conventionally DSCR uses net operating income — revenue after operating costs but before financing costs and corporation tax. That keeps the ratio focused on operating cash generation rather than how the business is funded.
Why is 1.25 a common threshold?: It gives the business a 25% cushion above its debt obligations to absorb a bad month, a late payer or a small cost step-change. Different products use different thresholds.

See which products may fit your DSCR

DSCR alone tells you how affordable additional debt is. The eligibility checker maps that against trading history, sector and the use case to surface which finance types may make sense to apply for.

Check eligibility Finance glossary

Important — educational guidance only

Not regulated by the FCA and not a credit broker.
Not financial, legal or tax advice.
Not a loan offer and not a guarantee of approval.
Subject to lender underwriting — criteria can change.

Lendrly provides general eligibility guidance only. It is not financial advice, a loan offer, or a guarantee of approval. Provider criteria can change and final approval is subject to lender underwriting, affordability checks, credit assessment, and documentation. Lendrly is not a regulated credit broker; we do not submit applications on your behalf.