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Page written by Ian Hawkins. Last reviewed on March 11, 2026. Next review due October 1, 2027.
1. Monthly net operating income
Your net operating income is the income left after all your operating expenses are paid.
Your monthly operating income is:
$-
2. Monthly debt service cost
Your debt service cost is the dollar sum of all of your loan payments over one month.
Your monthly total debt service cost is
$-
DSCR = Monthly net operating income ÷ Monthly debt service cost
Monthly net operating income
$-
Monthly debt service cost
$-
Debt service coverage ratio:
-
DSCR is a financial metric used by lenders to assess a borrower’s ability to cover their debt obligations with available income. It measures the relationship between a company’s operating income and its debt obligations, indicating its ability to service its debt.
DSCR = Net Operating Income / Total Debt Service.
Net Operating Income represents the income generated by a business before interest and taxes, while Total Debt Service includes all principal and interest payments on outstanding debt.
The DSCR required to qualify for a loan varies depending on the lender, the type of loan and the specific circumstances of the borrower. Generally, lenders look for a DSCR of at least 1.25 to 1.5, indicating that the business’s operating income is sufficient to cover its debt obligations comfortably.
A DSCR loan is a type of financing where the lender evaluates the borrower’s ability to service debt using the Debt Service Coverage Ratio (DSCR). Lenders use this ratio to assess the borrower’s financial health and determine their eligibility for the loan.
To qualify for a DSCR loan, borrowers typically need to demonstrate a strong DSCR, sufficient collateral and a solid financial track record. Lenders may also consider factors such as the borrower’s credit history, business plan and, and industry trends when evaluating loan applications.
Disclaimer: Swoop Funding LLC (“Swoop”) is a financial technology platform and commercial finance broker, not a lender. Swoop does not provide loans or make credit decisions. We match US-based firms with third-party lenders, equity funds, and grant agencies. All financing is subject to lender credit approval and the specific terms and conditions of the funding provider.
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