Business Loan Affordability Calculator
Enter your monthly revenue and outgoings to find out what loan repayment your business can comfortably absorb — and what that means in borrowing terms.
By LoanLens · Updated February 2026
How lenders assess affordability
Most business lenders use a metric called the Debt Service Coverage Ratio (DSCR) — sometimes called interest cover — to assess whether your business can comfortably service a loan.
DSCR is calculated as: Net operating income ÷ Total annual debt service. Most lenders require a DSCR of at least 1.25x, meaning your business must generate £1.25 for every £1 of debt repayment. Some secured lenders will accept 1.1x; unsecured lenders often want to see 1.5x or higher.
Our calculator uses a conservative proxy: it caps your repayment headroom at 50% of net profit. This typically implies a DSCR well above 1.25x, giving you a sensible starting point rather than a theoretical maximum.
What affects how much you can borrow?
- Turnover and profit: Lenders need to see that revenue is consistent and that your margins support debt repayment.
- Trading history: Most unsecured lenders require at least 12 months of trading; many want 2+ years for larger facilities.
- Credit score (business and personal): Your personal credit history matters for small business loans, especially unsecured ones. CCJs, defaults, and missed payments will limit your options.
- Security: Secured loans (backed by property, equipment, or a personal guarantee) typically allow larger borrowing at lower rates.
- Existing debt: Lenders look at your total debt burden, not just this loan. Multiple facilities reduce how much more you can borrow.
- Business sector: Some sectors are considered higher risk by lenders (hospitality, retail, construction). This may affect rate and availability.
Related guides
Frequently asked questions
How much can a business borrow?
There is no universal limit. Most unsecured business loans go up to £500,000; secured loans can be significantly higher. What you can actually borrow depends on your turnover, profit margins, trading history, credit profile, and the type of lender. As a rough guide, many lenders will consider lending up to 25–30% of annual turnover on an unsecured basis.
Do lenders look at turnover or profit?
Both, but for different things. Turnover tells lenders about the scale of your business and sets an upper borrowing limit. Profit (specifically net operating profit) determines whether you can actually service the debt. A business with high turnover but thin margins may qualify for a smaller loan than its revenue alone would suggest.
What is a DSCR?
The Debt Service Coverage Ratio measures how comfortably your business income covers its debt repayments. A DSCR of 1.25x means you earn £1.25 for every £1 of loan repayment — the minimum many commercial lenders accept. Below 1.0x means the business cannot technically cover its debt from operating income, which most lenders will decline.
LoanLens provides information and educational tools, not regulated financial advice. We are not authorised or regulated by the Financial Conduct Authority. Calculator results are estimates based on the information you provide and typical market data. Always seek independent professional advice before making financial decisions.
What is DSCR and how do lenders use it?
DSCR stands for Debt Service Coverage Ratio — the standard measure lenders use to assess whether your business can afford a loan. It is calculated as:
Net Operating Income ÷ Total Annual Debt Service
Most UK business lenders require a minimum DSCR of 1.2× to 1.5×, meaning your business should earn at least £1.20–£1.50 in operating income for every £1 of annual loan repayments. A ratio below 1.0× means your business cannot cover its debt from current income — lenders will typically decline this application.
How this calculator works
Enter your monthly revenue, existing monthly costs (excluding any loan repayments you're exploring), and the interest rate and term of the loan you're considering. The calculator works backwards from a target DSCR of 1.25× to find the maximum monthly repayment your business can sustain — then converts this to a maximum borrowing amount using standard amortisation.
The results are indicative, not a lending decision. Different lenders apply different DSCR thresholds, and some factor in sector risk, director creditworthiness, and the age of your business. This calculator gives you a realistic starting point for conversations with lenders.
What if you already have existing loans?
If you already have loan repayments, include those in your monthly costs figure. The calculator will assess affordability for the additional borrowing you're considering on top of existing debt service. Alternatively, you may want to explore whether consolidating existing debt could improve your DSCR by reducing the total monthly repayment burden.