DSCR (Debt Service Coverage Ratio)
What is dscr (debt service coverage ratio)? DSCR is a lender ratio that compares a business's net operating income to its total debt obligations — a DSCR above 1.25x is the typical threshold for trucking working-capital and equipment loans.
Full definition
Debt Service Coverage Ratio measures whether a business generates enough cash to comfortably cover its loan payments. The formula is simple: net operating income divided by total annual debt service (principal + interest on all loans). A DSCR of 1.0x means the business exactly breaks even on debt; 1.25x means there's 25% cushion above the payment; 0.85x means the business doesn't cover its loans on operating income alone.
Most trucking-equipment lenders look for DSCR ≥ 1.20x-1.25x on combined existing and proposed debt. Working-capital lenders may go as low as 1.10x; SBA-backed truck loans often want 1.25x or better. For a carrier with $480,000 in revenue, $360,000 in operating expenses, and $84,000 in current annual loan payments, DSCR is ($480k − $360k) / $84k = 1.43x — comfortably bankable.
DSCR is calculated on tax returns and P&L statements, not gross revenue. Lenders normalize one-time owner draws, depreciation, and non-recurring expenses. For owner-operators filing as a sole prop, DSCR underwriting is harder because personal and business cash flow blur on the Schedule C.
If DSCR is below the lender's threshold, options include extending term to lower the payment, putting more down, paying off other debt first, or pulling additional revenue evidence — broker pay history, factoring deposit records — to support the underwriter's case.
Example
- $600k in trucking revenue minus $440k operating expense = $160k NOI. With $100k in annual truck and trailer payments, DSCR = $160k / $100k = 1.60x — strong bankable territory.