# Debt service coverage calculator

**Short answer:** With $90,000 of EBITDA and $42,000 of current debt payments, a $150,000 loan at 13.00% brings coverage to 1.31:1. SBA's minimum is 1.15:1 on a Standard 7(a) loan (SOP 50 10 8.1, Sec. B, Ch. 1, Para. C).

Canonical page: https://www.sbaexpress.loans/tools/debt-service-coverage/
Last checked: 2026-11-09

## How this is computed

SOP 50 10 8.1 measures coverage as operating cash flow divided by debt service. Operating cash flow is EBITDA, with additions and subtractions the lender can justify. Debt service is the future required principal and interest on all business debt, including the new SBA loan (Sec. B, Ch. 2, Para. C.2.a; Sec. B, Ch. 1, Para. C).

```
EBITDA   = net income + interest + taxes + depreciation and amortization
coverage = (EBITDA + adjustments) / yearly debt payments
```

The largest new loan is the amount whose yearly payment uses up the cash left after current debts, at the coverage you chose. It uses the rate and term you entered.

[SOP 50 10 8.1](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx) sets these minimums. Lender policies can be tighter.

**SBA minimums in SOP 50 10 8.1**

| Loan | Minimum coverage | Source |
| --- | --- | --- |
| 7(a) Small, other than a change of ownership | 1.10:1 | Sec. B, Ch. 2, Para. C.2.a |
| Standard 7(a) | 1.15:1 | Sec. B, Ch. 1, Para. C |
| SBA Express, other than a change of ownership | No fixed ratio. The lender must show reasonable assurance of repayment. | Sec. B, Ch. 2, Para. C.2.b.iii |
| Change of ownership: initial acquisition or owner buyout | 1.25:1 | App. 15, Para. C.2.b |
| Change of ownership: business expansion | 1.15:1 | App. 15, Para. C.2.b |

## A worked example

Take a business with $58,000 of net income, $9,000 of interest expense, $6,000 of income taxes and $17,000 of depreciation and amortization. That is $90,000 of EBITDA. It pays $42,000 a year on current debt. It wants a $150,000 loan over 120 months at SBA's maximum rate for that size, 13.00% today. These figures are an illustration, not a quote.

**Worked example**

| Item | Amount |
| --- | --- |
| Operating cash flow (EBITDA) | $90,000 |
| Yearly payment on the new loan | $26,876 |
| Total yearly debt payments | $68,876 |
| Coverage today | 2.14:1 |
| Coverage with the new loan | 1.31:1 |
| Largest new loan at 1.15:1 | $202,379 |

What this does not tell you

This tool measures cash flow. It does not estimate whether a lender will approve a loan. A Standard 7(a) loan also needs 1:1 coverage on a global basis (Sec. B, Ch. 1, Para. C), and a lender can adjust the cash flow you enter.

## Common questions

### What counts as debt service?

The future required principal and interest on all business debt, including the new SBA loan (SOP 50 10 8.1, Sec. B, Ch. 2, Para. C.2.a).

### Is EBITDA the same as net income?

No. EBITDA adds interest, taxes, depreciation and amortization back to net income. A lender can also adjust it for items such as owner's draw, unfunded capital expenditures and rent (SOP 50 10 8.1, Sec. B, Ch. 1, Para. C.2.a).

### What if my coverage is below the minimum?

On a Standard 7(a) loan, the lender must look at 2 years of detailed projections when history falls short (SOP 50 10 8.1, Sec. B, Ch. 1, Para. C.2.a). A smaller loan or a longer term also lifts the ratio.

### Does SBA Express have a minimum ratio?

Not for most SBA Express loans. The credit analysis must show a reasonable assurance of repayment, and the lender's own standards apply (Sec. B, Ch. 2, Para. C.2.b.iii). [Read the SBA Express rule](https://www.sbaexpress.loans/answers/sba-express-debt-service-coverage/).

## Put this calculator on your site

Paste this code into any page. It shows the calculator in a frame with no site header. Replace YOUR-NAME with a short name for your organization. The name travels with any visitor who moves to the next step. The height fits a laptop column. On a phone the frame scrolls inside itself, so raise the height if your page is narrow.

```
<iframe src="https://www.sbaexpress.loans/embed/debt-service-coverage/?partner=YOUR-NAME" title="Debt service coverage calculator" width="100%" height="1260" style="border:0" loading="lazy" allow="clipboard-write"></iframe>
<p><a href="https://www.sbaexpress.loans/tools/debt-service-coverage/">Debt service coverage calculator</a> from SBA Express Loans</p>
```

## Sources

- [SOP 50 10 8.1, Sec. B, Ch. 1, Para. C, and Ch. 2, Para. C.2](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. C.2.b](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR 120.214, variable interest rates](https://www.ecfr.gov/current/title-13/section-120.214)
- [WSJ Prime Rate, Federal Reserve series DPRIME via FRED](https://fred.stlouisfed.org/series/DPRIME)