Lender approval is the floor of affordability, not the ceiling. This calculator applies the same DSCR-1.25+ target and 10–15%-of-revenue rule experienced underwriters use to size a conservative, durable loan amount from your actual cash flow — not the maximum a lender might approve.
Quick answer: Revenue, operating expenses, and existing debt → a conservative max loan amount, projected DSCR, and payment-to-revenue check against the 10–15% rule.
Net operating income = Gross monthly revenue − Operating expenses Available headroom = Net operating income − Existing monthly debt Conservative affordable payment = Available headroom × 70% Max loan amount = conservative payment converted via standard amortization at the given APR/term DSCR = Net operating income ÷ (Existing debt + conservative new payment)
Assumptions
Available headroom $21,500/mo. Conservative payment $15,050/mo → max loan amount ≈ $680,000, DSCR ≈ 1.33× — on target, above the 1.15 lender minimum.
Start from your net operating income (gross revenue minus operating expenses, before debt), subtract existing debt payments to find your available headroom, then take a conservative draw (this calculator uses 70%) rather than the full headroom. That conservative monthly payment, converted through standard amortization at your expected APR and term, is a durable max loan amount — one that keeps DSCR at 1.25+ instead of the bare 1.15 lender minimum.
1.15 is the floor SBA preferred lenders must document under SOP 50 10 — it means a 13% revenue drop can push coverage below 1.0. A 1.25+ target leaves more cushion: the business can absorb a larger revenue decline (roughly 20–25%) before debt service becomes unaffordable from operations. Lenders will often approve up to the 1.15 floor; that doesn't mean it's the amount that lets you sleep at night.
A rule of thumb used by experienced underwriters: total monthly debt service across all business loans shouldn't exceed 10–15% of gross monthly revenue. Above 15%, there's very little margin left for a slow month, an unexpected expense, or a revenue dip — even if DSCR technically still clears the lender's minimum.
Lenders size loans to their own minimum DSCR (typically 1.15–1.25) using your full available cash flow. This calculator applies a conservative 70% draw on top of that same headroom specifically to leave a buffer — so its output is intentionally more conservative than a lender's maximum approval. Borrowing less than the lender's ceiling is often the more durable choice.
Your worst realistic month (or trailing 2-3 month low). A business that can handle a payment in peak season may not be able to service it in a slow month — affordability has to hold in the trough, not just the average or the peak. Re-run this calculator with your lean-month revenue and expenses as a stress test.