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Interest cover = operating profit / interest payable. Lenders watch it to check profit comfortably covers interest.
The two affordability ratios
Interest cover divides operating profit by the interest bill. Debt service cover divides free cash by total debt service (interest plus capital). Together they show how comfortably you can carry the loan.
The thresholds lenders look for
Many lenders want interest cover of at least 2–3× and debt service cover of at least 1.25×. Below those, the loan looks tight, and the lender either declines, lends less, or prices the extra risk into the margin.
Stress-tested cover
Lenders also test cover at a higher stress rate, not just today’s. A loan that only just passes at current rates may fail the stress test — so borrow with an interest rate buffer.
Run the numbers first
Calculate your cover before you apply — it is exactly what the lender will do. Use the calculator below and fix any shortfall before applying.
Where Credicorp fits
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
See how to check loan affordability and interest coverage ratio.
Frequently asked questions
What interest cover do lenders want?
Often at least 2 to 3 times, meaning profit covers the interest bill twice or three times over. Below that, expect a decline, a smaller loan, or a higher margin.
What is the difference between interest cover and DSCR?
Interest cover looks at profit against interest only. DSCR looks at cash against interest plus capital repayments, so it is a fuller affordability test.
Why stress-test the cover?
Because rates can rise. Lenders test cover at a higher rate so the loan stays affordable if borrowing costs climb. Borrow with a buffer to pass.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.