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Can I afford this business? SBA 7(a) payment and DSCR calculator

A deal can look cheap on a multiple and still be tight once you borrow the money and pay yourself. This calculator estimates an amortizing loan payment and debt-service coverage from figures you enter.

How to use this calculator

  1. Enter the asking price and a down-payment percent. Ten percent is a common planning figure for SBA 7(a) equity, not a rule.
  2. Enter an interest rate and term. The defaults (10.5% and 10 years) are planning assumptions for an asset-light small business, not a quote. Change them to match what a lender is actually discussing.
  3. Enter a conservative SDE or cash flow — preferably after you have recast add-backs.
  4. Enter a market wage for the working owner or a manager. Coverage often looks fine until that wage is subtracted.

Debt-service coverage is cash flow divided by annual debt service. Many small-business lenders look for about 1.25× after a realistic wage. If this screen lands below that, the price, the terms, or the cash flow needs work before you treat the deal as bankable.

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FAQ

What is DSCR?

Debt-service coverage ratio: annual cash flow divided by annual loan payments. A figure of 1.25× means there is $1.25 of cash flow for every $1 of debt service. It is a lender shorthand, not a guarantee of approval.

Why use a 10-year term?

SBA 7(a) loans for small, often intangible-heavy businesses are commonly amortized over about 10 years. When a building or heavy equipment is part of the deal, terms can be longer. Use the term you are actually being offered.

Is 10.5% a current SBA rate?

No. It is a planning default you can change. SBA 7(a) rates usually move with Prime plus a spread that depends on loan size and the borrower’s credit. Ask a lender for a current estimate.

Should I use claimed SDE or adjusted SDE?

Use a conservative, recast number. Coverage calculated on inflated add-backs will look better than the business can really support.

Disclaimer. Deal Check is not financial, legal, or accounting advice. These pages and calculators are educational planning tools and can miss context. Verify every number with a CPA and a business broker, and do your own due diligence before making an offer.