DSCR CalculatorDebt Service Coverage Ratio — Business Loan Eligibility

For MUDRA Shishu loans (up to ₹50,000), a DSCR of ≥1.00 is typically accepted since the loan amount is small and risk is limited. For MUDRA Kishor (₹50,000–₹5 lakh) and MUDRA Tarun (₹5–₹10 lakh), banks prefer DSCR ≥ 1.25.

A DSCR of 1.50 or above is considered "strong" and may earn you better interest rates, faster processing, and reduced collateral requirements. If your DSCR is between 1.0 and 1.25, you should provide collateral or a guarantor to improve approval chances.

Net Operating Income (NOI) is your annual business income before deducting interest payments, depreciation, and taxes. It is essentially EBITDA(Earnings Before Interest, Taxes, Depreciation & Amortization).

Formula: NOI = Revenue − Operating Expenses (excluding interest, tax, and depreciation)

Example: If your shop earns ₹8L/year and operating costs (rent, salaries, raw material) are ₹3L/year, your NOI = ₹5L/year. This is the figure banks use — not your take-home profit.

For new businesses, use Year 1 projected figures from your Detailed Project Report (DPR). Banks accept projected NOI as long as it is supported by realistic market research and cost estimates.

A DSCR of 1.0 means your income exactly covers your debt payments — with zero buffer. This is highly risky because:

• Seasonal dips in revenue could cause you to miss EMIs
• Unexpected expenses (repairs, taxes) could tip you into default
• Working capital needs compete with loan repayment

The IBA guideline of 1.25× ensures a 25% safety margin — if revenue drops by up to 20%, you can still repay comfortably. This protects both the borrower and the bank's NPA (Non-Performing Asset) ratios.

Yes — for all startup and new-business loans under MUDRA, PMEGP, and Stand-Up India schemes, banks explicitly accept projected financialspresented through a proper Detailed Project Report (DPR).

The projections should be conservative, market-aligned, and supported by:

• Capacity utilisation assumptions (60–70% in Year 1)
• Local market demand data or trade association benchmarks
• Realistic raw material and labour cost estimates
• A 5-year P&L with DSCR computed for each year

MudraReady project reports include all of this — formatted exactly as banks require.

A low DSCR doesn't automatically mean rejection — but you will need to take corrective steps:

• Reduce loan amount: A smaller loan means smaller EMIs and higher DSCR
• Extend tenure: Longer repayment period = lower annual debt service
• Provide collateral: Property, gold, or FD can offset weak DSCR
• Add a co-applicant/guarantor: Their income can be included in the DSCR calculation
• Pre-close existing loans: Reducing existing EMIs improves your DSCR immediately
• Revise NOI projections: If underprojected, a revised DPR with proper market study can improve the number authentically

Use this calculator interactively — adjust tenure and loan amount to find the combination that brings your DSCR above 1.25.