DSCR requirements vary by loan type, lender risk appetite, and collateral quality. Understanding these thresholds helps you assess your borrowing capacity before approaching lenders.
DSCR Requirements by Loan Program
| Loan Type | Min DSCR | Notes |
|---|---|---|
| SBA 7(a) | 1.25 | Global cash flow (all business obligations) |
| SBA 504 | 1.25 | Property + business combined |
| Conventional commercial RE | 1.20–1.30 | Varies by property type |
| USDA B&I | 1.25 | Rural business development |
| Community bank business loan | 1.25–1.40 | More conservative underwriting |
| Hard money / bridge loan | 1.00–1.10 | Asset-based; shorter terms |
| CMBS loan | 1.25 | Standardised underwriting criteria |
Global vs. Property DSCR
For business owners who also own the property: - Property DSCR: NOI from the property ÷ property debt service only - Global DSCR: Total business cash flow ÷ all debt obligations (personal + business)
SBA lenders require the global DSCR to meet 1.25 even if the property DSCR alone exceeds the threshold.
Seasonal Businesses
For businesses with seasonal revenue, lenders often average 3 years of NOI rather than using the most recent year. Use a trailing 3-year average NOI in your DSCR calculation for a more accurate assessment of borrowing capacity.