Run the DSCR Math Before Your Banker Does

Before you ask the bank for money, run the math yourself.

Most shop owners think about the loan first.

How much do I need? What is the rate? What is the payment?

Those questions matter.

But the better question is this:

Can the business support the debt?

That is what DSCR helps answer

DSCR is usually calculated as EBITDA divided by annual debt service.

Annual debt service means principal and interest payments.

If your shop has $400,000 of EBITDA and $250,000 of annual debt payments, your DSCR is 1.6.

That means the business generates $1.60 of EBITDA for every $1.00 of required debt payments.

Profit is not the same as cushion

Now compare that to a shop with the same $400,000 of EBITDA and $380,000 of annual debt payments.

Both shops may be profitable.

Only one has real cushion.

That cushion matters when sales dip, parts get delayed, receivables stretch, or an expansion takes longer than planned.

The bank is going to run this anyway

A banker is going to look at this before they get comfortable with the loan.

An owner should look at it before getting excited about the opportunity.

This matters if you are buying equipment, refinancing debt, expanding a location, acquiring another shop, or trying to understand how much borrowing capacity the business really has.

Use the calculator as a starter tool

I built a simple DSCR calculator for collision shop owners.

It is not a full financial model.

It will not tell you whether a deal is good or bad.

It is just a quick way to estimate how much coverage your business has before the bank runs the same math.

Use it to estimate your current DSCR, your DSCR after new debt, and the maximum annual debt service your business may support at a target coverage level.