Lender loan coverage check.

The debt service coverage ratio (DSCR) compares operating income to debt payments. Divide net operating income (NOI) by annual debt service. A DSCR of 1.25 means income covers debt payments by 25% margin. Lenders typically require minimum 1.20-1.25 for commercial loans; 1.40-1.50 for riskier property or business loans.

250k NOI against 200k annual debt service = 1.25 DSCR. Cushion is 50k - income can drop 20% before default. At 1.5 DSCR (same NOI, 167k service), cushion widens to 83k - income can drop 33% before breaching. Lenders price loans based on DSCR: higher DSCR means lower interest rates and more borrowing capacity.

DSCR below 1.0 means operating income doesn't cover debt payments - the business is losing money even before tax and owner draws. Banks call these loans immediately for breach, or restructure with stricter terms. Before taking a new loan, model DSCR under stress scenarios (20% revenue drop, 10% cost rise) to see if cover stays above 1.0.

A worked example

Try the defaults: net operating income of 250,000, annual debt service of 200,000. The tool returns 1.25. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Net Operating Income and Annual Debt Service. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

DSCR = NOI ÷ annual debt service. Cushion = NOI - debt service. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.