The method
How it is worked out
Max annual payment = EBITDA ÷ DSCR − existing debt payments
- DSCR
- Debt service coverage ratio: cash available ÷ debt payments
- EBITDA
- Earnings before interest, tax, depreciation, amortisation
Business Loan Affordability Calculator
Find the largest business loan your cash flow can service, using the debt service coverage ratio lenders apply. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Lender adjustmentsLenders normalise EBITDA for one-offs and owner pay.
- SecuritySecured facilities may accept a lower DSCR.
- CovenantsCover must hold every year, not just at drawdown.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the Business Loan Affordability Calculator
Find the largest business loan your cash flow can service using the debt service coverage ratio lenders apply, and check whether the amount you want will pass. Knowing the lender's arithmetic before you apply saves a declined application.
How it works and an example to tryShow less
How to use the result
Annual capacity for new debt is operating profit divided by the required DSCR, less existing debt payments. That capacity is converted into a loan amount at the rate and term entered. The tool also shows the DSCR the requested loan would produce.
Example to try
EBITDA of £180,000, existing debt payments of £24,000 and a 1.25× requirement leave £120,000 a year for new debt: roughly £482,000 over five years at 9%. A £250,000 request gives a comfortable 2.2× cover.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Owner-managers preparing a loan application, finance directors sizing a facility and advisers checking whether a proposal will pass a lender's credit committee.
Mistakes worth avoiding
- Using turnover or net profit instead of EBITDA.
- Forgetting existing hire-purchase, leases and director loans in existing debt.
- Sizing the loan to the maximum rather than to the need.
Questions
What does the Business Loan Affordability Calculator do?
Find the largest business loan your cash flow can service, using the debt service coverage ratio lenders apply.
How should I use the result?
Annual capacity for new debt is operating profit divided by the required DSCR, less existing debt payments. That capacity is converted into a loan amount at the rate and term entered. The tool also shows the DSCR the requested loan would produce.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with a business loan affordability calculator?
Using turnover or net profit instead of EBITDA. Forgetting existing hire-purchase, leases and director loans in existing debt. Sizing the loan to the maximum rather than to the need.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Results are estimates based on the figures entered, for general information only, and not financial, investment, tax or legal advice. See our terms of use.