Glossary · Reading the business
In short
Yearly cash flow divided by yearly loan payments. 1.25x means $1.25 of cash for every $1 of payments. Lenders want 1.1x minimum, 1.25x to get comfortable.
DSCR is the single most important number in your underwriting. Lenders divide the business's annual cash flow — after paying you a market-rate salary — by the total annual debt service on the SBA loan plus any other obligations. The SBA requires at least 1.0x globally, but most lenders want 1.25x or better to approve with confidence. A DSCR below 1.0x means the business literally can't cover its debt from operations, which is a hard stop.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-14 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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