{
  "title": "What is DSCR? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-is-dscr/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-22",
  "updated": "2026-10-22",
  "section": "Glossary",
  "keyword": "Debt service coverage ratio (DSCR)",
  "short_answer": "The debt service coverage ratio (DSCR) measures how many times a business's yearly cash flow covers its yearly loan payments. It is cash flow available for debt service divided by annual principal plus interest. A DSCR of 1.0x means the business just covers the loan; lenders commonly want about 1.25x or more.",
  "facts": {
    "SDE": [
      "$320,000",
      "Rebuilt from three years of tax returns"
    ],
    "Less: owner-operator salary": [
      "−$90,000",
      "Market wage for the buyer's role"
    ],
    "Less: replacement equipment reserve": [
      "−$30,000",
      "Mowers and trucks wear out"
    ],
    "Cash flow available for debt service": [
      "$200,000",
      ""
    ],
    "SBA 7(a) loan: $800,000 over 10 years at 10.5%": [
      "$129,500",
      "Annual principal + interest"
    ],
    "Seller note: $100,000 over 5 years at 7%": [
      "$23,800",
      "Annual principal + interest"
    ],
    "Annual debt service": [
      "$153,300",
      ""
    ],
    "DSCR": [
      "1.30x",
      "$200,000 ÷ $153,300"
    ]
  },
  "sources": [
    "https://www.sba.gov/funding-programs/loans/7a-loans",
    "https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs",
    "https://www.investopedia.com/terms/d/dscr.asp"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}