Debt service cover calculator

How to read the result

Debt service cover divides the cash the business earns in a year by the repayments it must make on its debt in that year. The earnings side here is EBITDA less the adjustments you enter — tax actually paid, owners' drawings above a commercial salary and the capital spending needed just to stand still. The repayment side is every scheduled dollar of principal and interest, existing and proposed.

The dial shows two dots: where cover sits today, and where it would sit with the new facility. If you enter the minimum from your facility letter, the calculator also works out how far earnings could fall before you'd breach it. That buffer is often more useful than the ratio itself — a lender's first question about any new facility is what happens in a weaker year.

Improving cover without cutting the borrowing

• Term: a longer amortisation lowers annual repayments on the same balance.
• Structure: interest-only periods or a revolving working capital limit carry different annual obligations from a fully amortising term loan.
• Refinance expensive short-term debt: merchant advances and short daily-repayment loans can dominate the repayment line. See consolidating business debt.
• Security: property-backed facilities are assessed with more weight on security and exit. See property-backed business loans.

For the full picture of the ratios lenders test, read the guide to debt service cover and interest cover. When you're ready, tell us the numbers — there's no credit check to enquire, your file isn't shopped around, and one specialist will talk it through with you.

Debt service cover questions

What is debt service cover?

It's the number of times a business's cash earnings cover its scheduled debt repayments over a year — principal and interest together. A result of 1.0x means earnings exactly meet repayments with nothing to spare; anything below 1.0x means repayments are being met from somewhere other than trading.

Which earnings figure should I use?

Most lenders start from EBITDA and then adjust: they may deduct tax paid, owners' drawings above a normal salary, or maintenance capital spending, and add back genuine one-offs. Use the figure closest to how your facility letter defines it. If you don't have a covenant, use EBITDA less tax and maintenance capex for a conservative read.

Why doesn't the calculator ask for an interest rate?

Because it doesn't need one. Enter the repayments in dollars — your loan statements show existing repayments, and any proposal you've received will show the new ones. That keeps the result grounded in real numbers rather than assumptions.

What cover ratio will a lender want?

It depends on the lender, the security and the facility. Your existing facility letter may set a minimum, which you can enter to see headroom. Property-secured lenders often place more weight on security and exit, while cash-flow lenders lean harder on cover. We'll tell you how a particular structure is assessed.

My cover is below 1.0x. Is borrowing off the table?

Not necessarily, but the conversation changes. A longer term, interest-only period, refinancing expensive short-term debt, or a property-secured structure can all lower annual repayments. The calculator lets you test a lower proposed repayment to see what would need to change.