DSCR, explained: the one ratio your loan hinges on
If you learn one piece of lending math, make it this one. Debt-service coverage is the number a lender calculates before almost anything else — and most owners never put it in their plan.
DSCR = the cash your business generates ÷ the loan payments it has to make. A DSCR of 1.0 means you make exactly enough to cover the payment and nothing more. Lenders don't like living on the edge, so they want a cushion.
The number they want to see
For most Canadian small-business lending, roughly 1.25× to 1.5× is the comfortable range. Below about 1.2× and the file gets nervous — there's no room for a slow month.
A quick worked example
Say your business throws off $48,000 a year in cash available for debt, and your loan payments are $34,000 a year. That's 48,000 ÷ 34,000 = 1.41×. Right in the zone.
Why show it yourself
If you don't calculate DSCR, you've handed the single most important number to the person deciding your fate — and hoped they land somewhere kind. Put it in the plan, show the inputs, and you've answered their biggest question before they asked it.
See where your plan stands
Paste the plan you have into the free Scanner. It scores you against the eight criteria Canadian lenders use — in about thirty seconds, no account, nothing leaves your device.
Score my plan — freeLenderReady is an educational service, not a lender, broker, or financial advisor. Lending criteria vary by institution and change over time; treat this as a starting point, not a guarantee.