What is a good DSCR? Benchmarks for business borrowing

What the numbers mean

A DSCR of 1.0 means cash exactly equals repayments — no room to spare. 1.25 means £1.25 of cash per £1 of repayment, a modest cushion. 1.5 and above is comfortable, with real headroom. Below 1.0, the business cannot service the debt as it stands.

Why 1.25 is a common threshold

Many working-capital lenders set 1.25 as a minimum because it gives enough buffer to absorb an ordinary bad month without a missed payment. It is a practical balance between accessibility and safety, and a sensible target to aim for before applying.

When you need more

A young business, a volatile or seasonal one, or a large facility all warrant a higher ratio, because the cash is less certain. Aiming for 1.5 in these cases protects both you and the lender. See headroom.

When less may pass

A very stable business with predictable, contracted cash — say, long recurring revenue — may be assessed comfortably on a slimmer ratio, because the cash is reliable. Even so, borrowing to a thin cover leaves little room for surprises. See calculating DSCR.

Find your number

Use the calculator to work out your DSCR and see where it sits against these benchmarks.

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