Finance Calculator
Loan Affordability Calculator
Estimate how much your business could afford to borrow based on net operating income, existing commitments, and the debt service coverage ratio lenders typically require.
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How does loan affordability work?
Loan affordability is about how much debt service your business cash flow can support. Lenders assess this by looking at your net operating income relative to total debt obligations — current and proposed.
The debt service coverage ratio (DSCR) is the standard measure. Most lenders require a minimum DSCR of 1.25x, meaning your operating income must be at least 125% of total annual debt service. Some lenders may accept 1.15x with strong security; others may require 1.5x or higher.
Maximum Total Debt Service = NOI / Target DSCR
Available for New Debt = Max Total Debt Service − Existing Debt Service
Max Borrowing = PV of annuity at given rate and term for that annual payment
Assumptions and caveats
- •Net operating income should reflect sustainable, recurring cash flow — not one-off gains.
- •Lender DSCR thresholds vary by sector, security, and borrower profile. 1.25x is common but not universal.
- •This model assumes a fixed-rate, fully amortising loan structure.
- •Results are indicative. Actual borrowing limits depend on comprehensive lender assessment.
Frequently asked questions
Lenders typically assess affordability by comparing your net operating income against proposed debt service payments. The DSCR is the most common measure — most lenders want to see at least 1.25x coverage.
DSCR measures how many times your available income covers your debt repayments. A DSCR of 1.25x means you earn 25% more than needed to cover debt obligations.
Typically EBITDA or operating profit before interest and tax. It represents the cash available to service debt.
No. This provides an indicative estimate only. Actual borrowing capacity depends on lender criteria, security, sector, and credit history.
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