{"ok":true,"canonical_url":"https://dealroom.so/glossary/debt-service-coverage-projection","api_url":"https://dealroom.so/api/public/glossary/debt-service-coverage-projection","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"debt-service-coverage-projection","term":"Debt Service Coverage Projection","group":"Reading the business","definition":"This forecasts the business's ability to generate enough cash flow to cover its principal and interest payments on the new loan. It's a critical measure of your repayment capacity.","what_it_means":"Lenders require a Debt Service Coverage Projection to ensure the business can comfortably make loan payments after your acquisition. This usually involves financial projections for the next 1-2 years. A strong projection, often showing a DSCR of 1.25x or higher, is essential for SBA approval.","url":"https://dealroom.so/glossary/debt-service-coverage-projection","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"dscr","term":"DSCR","url":"https://dealroom.so/glossary/dscr"},{"slug":"cash-flow-after-debt-service","term":"Cash flow after debt service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"},{"slug":"financial-projections","term":"Financial projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"repayment-capacity","term":"Repayment capacity","url":"https://dealroom.so/glossary/repayment-capacity"}],"related_questions":[{"question":"Does the SBA require a specific debt service coverage ratio (DSCR) for approval?","url":"https://dealroom.so/sba-7a/questions/does-the-sba-require-a-specific-debt-service-coverage-ratio-dscr-for-approval"},{"question":"When is a debt service coverage ratio waiver or exception possible for an acquisition?","url":"https://dealroom.so/for-lenders/questions/when-is-a-debt-service-coverage-ratio-waiver-or-exception-possible-for-an-acquisition"},{"question":"How does a seller note on full standby affect the debt service coverage ratio calculation?","url":"https://dealroom.so/sba-7a/questions/how-does-a-seller-note-on-full-standby-affect-the-debt-service-coverage-ratio-calculation"},{"question":"What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?","url":"https://dealroom.so/sba-7a/questions/what-level-of-debt-service-coverage-ratio-dscr-does-an-sba-7-a-lender-typically-look-for"},{"question":"How does the SBA evaluate 'prudent lending standards' in 7(a) loan underwriting regarding debt service coverage?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-evaluate-prudent-lending-standards-in-7-a-loan-underwriting-regarding-deb"},{"question":"How does a seller note on partial standby affect an SBA 7(a) loan's debt service coverage ratio?","url":"https://dealroom.so/for-lenders/questions/how-does-a-seller-note-on-partial-standby-affect-an-sba-7-a-loan-s-debt-service-coverage-r"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Debt Service Coverage Projection","url":"https://dealroom.so/glossary/debt-service-coverage-projection","source_type":"DealRoom Data"}}