Debt-service coverage ratio (DSCR) is your practice cash flow divided by your total annual obligations: the new loan payment, other debts and personal living expenses. Many dental lenders look for 1.25x or more, as a guideline rather than a hard rule. Example: $247,500 of cash flow against $201,133 of obligations is 1.23x. That is close, but below the common standard.
DSCR calculator
Enter your own numbers. The defaults are example inputs, not benchmarks: they describe one hypothetical practice so you can see how the math works. Results update as you type.
Example inputs, not benchmarks. Planning math, not a loan approval. Monthly payment assumes a fully amortizing loan.
What is DSCR?
Debt-service coverage ratio measures how many times your cash flow covers the payments you owe. A ratio of 1.00x means every dollar of cash flow is spoken for. A ratio of 1.25x means you have $1.25 of cash flow for every $1.00 of obligations, so cash flow could fall 20% before the payments stopped being covered. Below 1.00x, the payments are not covered at all.
The formula is simple: DSCR = cash flow ÷ debt service. The arguments are about what goes on each side of the line. Which costs count as overhead? Which personal obligations count as debt service? Those choices are where a plan gets honest or gets optimistic.
In this calculator, cash flow is collections minus overhead, where overhead excludes your own pay and the loan payments. That leaves the money available to pay the bank, your other debts and your household. Bankrate's DSCR explainer uses the same basic structure: net operating income divided by total debt service [2].
How do dental lenders calculate DSCR?
There are two common versions, and the difference matters more than most dentists expect.
| Version | Cash flow side | Debt service side | What it tells the lender |
|---|---|---|---|
| Business DSCR | Practice cash flow | Practice loan payments only | Whether the practice can carry its own debt |
| Global DSCR | Practice cash flow (plus other household income, if any) | Practice loan payments, personal debts and living expenses | Whether you can carry the loan and still live |
A dental lender writing in ADA News in 2026 frames the benchmark as a global coverage ratio of at least 1.25 [1]. That is why this calculator includes your student loans, car payment, mortgage and living costs. A practice that covers its own loan easily can still fail a global test once your household is in the math.
Acquisitions work a little differently. When you buy an existing practice, the lender starts from that practice's tax returns and financial statements. The seller's reported profit is usually adjusted for items that will not continue under you, such as the seller's own compensation and one-time expenses. Many lenders then subtract a reasonable salary for you. These adjustments are where acquisition DSCR math gets argued, so ask each lender how it treats them. For the broader tradeoff, see startup vs. acquisition.
Startups have no history, so the lender works from your projections: expected collections, overhead and the budget behind the loan amount. That is why a defensible budget matters. A loan sized from a real line-item budget produces a payment you can stand behind. Read what dental lenders actually want for the rest of the underwriting picture.
What DSCR do lenders require?
The common benchmark is 1.25x. The ADA News column describes it as a guideline, not a strict minimum [1], and Bankrate notes that lenders set their own thresholds [2]. No single number applies to every lender or every loan. Ask each lender three questions before you apply:
- Business or global? Does the lender run coverage on the practice alone, or on the practice plus your household?
- What living-expense figure? Will it use your actual budget, or a figure of its own?
- What minimum, and in which year? Is the 1.25x test applied to year one of a startup, or to a stabilized year?
Some dental-focused lenders advertise high leverage. Bank of America Practice Solutions, for example, advertises up to 100% project financing for new office startups, subject to credit approval [3]. More financing does not change the coverage math. A bigger loan means a bigger payment, and the payment has to fit under your cash flow with room to spare. SBA-backed startups have their own rules too, including an equity injection of at least 10% of total project cost under SOP 50 10 8 [5].
I use 1.25x as the line in every plan I build, because it is the number lenders commonly look for. I am not a lender, and I take no referral fees from lenders. My job is to make sure your number clears the line before a lender ever sees it.
How do you raise your DSCR?
You either increase cash flow or shrink obligations. On a startup, the biggest levers are usually on the obligation side, because the loan is sized by decisions you control. Each row below changes one default input and holds everything else the same.
| Change from the example | Annual loan payments | Total obligations | DSCR |
|---|---|---|---|
| Example as entered | $93,133 | $201,133 | 1.23x |
| Borrow $100,000 less ($700,000) | $81,492 | $189,492 | 1.31x |
| 20-year term instead of 15 | $81,798 | $189,798 | 1.30x |
| Living expenses $60,000 instead of $72,000 | $93,133 | $189,133 | 1.31x |
| Overhead 65% instead of 70% | $93,133 | $201,133 | 1.44x |
| Interest-only payments ($5,500 a month), temporary | $66,000 | $174,000 | 1.42x |
- Plan fewer operatories. In the Alithos cost benchmark, going from 5 to 4 operatories on a standard lease build drops the model's point estimate from $933,500 to $784,800. That is planning math, not a quote, but it shows how fast the loan shrinks. Size space from production with the operatory square footage calculator.
- Choose a lower finish level. The Alithos estimator assumes $170 per square foot for a standard lease build and $220 for premium. Premium finishes are real money on the loan.
- Get more tenant improvement money. Every dollar the landlord funds is a dollar you do not borrow. See how TI allowances work and run the TI allowance calculator.
- Take a longer term, if offered. A longer term lowers the payment but costs more interest. Term limits depend on the loan type. Under SBA 7(a) rules, equipment and working capital loans generally run up to 10 years and real estate up to 25 [4]. Conventional dental lenders set their own terms.
- Lower personal costs. On a global test, a smaller car payment or household budget raises your ratio dollar for dollar.
- Use an interest-only period carefully. Some loans start with reduced payments while the practice ramps. That helps early coverage, but the full payment arrives later. Test your DSCR at the full payment, not the teaser.
Overhead is the most sensitive input. One dental lender writing in ADA News says overhead in a well-run general practice typically runs 58% to 68% of collections [1]. The 70% default here is an example input, not a benchmark. If you assume low overhead to make the ratio work, a lender will notice.
Worked example: the default inputs, step by step
Here is the full calculation behind the default inputs, so you can check the math by hand. The 15-year term and 8.25% rate match the assumptions in the Alithos estimator; they are planning assumptions, not a rate quote.
| Step | Calculation | Result |
|---|---|---|
| Annual collections | Example input | $825,000 |
| Practice cash flow | $825,000 × (1 − 70%) | $247,500 |
| Monthly loan payment | $800,000, 8.25%, 15 years (180 payments) | $7,761 |
| Annual loan payments | $7,761 × 12 | $93,133 |
| Other debt payments | Example input | $36,000 |
| Living expenses | Example input | $72,000 |
| Total obligations | $93,133 + $36,000 + $72,000 | $201,133 |
| DSCR | $247,500 ÷ $201,133 | 1.23x |
| Collections needed for 1.25x | 1.25 × $201,133 ÷ 30% | $838,056 |
| Shortfall against 1.25x | $247,500 − (1.25 × $201,133) | −$3,917 |
Read the result plainly: this practice covers its obligations, but not with the margin lenders commonly look for. It needs about $13,000 more in annual collections at the same overhead, or about $3,100 less in annual obligations, to reach 1.25x. Either fix is small. That is the point of running the number early. Small gaps are cheap to close before you sign a lease and expensive to close after.
To see what a different loan amount does to the payment alone, use the dental loan payment calculator. To see what the whole project might cost, run the cost estimator.
What are the limits of this calculator?
This is planning math, not a loan approval, a rate quote or financial advice. Only a lender can approve a loan.
- One year, steady state. It tests a single stabilized year. A startup's first year usually collects less while expenses run full, which is why working capital belongs in the budget.
- No taxes. It does not model income taxes on your earnings. Lenders differ on how they treat taxes, so ask each one.
- Fully amortizing payments. It assumes a fixed rate and level payments. Variable rates, balloon payments and interest-only periods change the real payment.
- Your inputs, your result. It cannot check whether your collections or overhead assumptions are realistic. That is the hard part.
- No loan sizing. It does not tell you how much you can borrow or what your project should cost. Those come from a budget, not a ratio.
If you want those pieces done properly, the Feasibility Check ($2,500 flat, credited toward the Budget Plan) includes a DSCR pre-check against the 1.25x standard. The Budget Plan ($7,500 to $10,000, flat fee, scope in writing) builds the full cash-flow and debt-service coverage analysis and a lender-ready package. For the financing landscape behind all of this, start with the dental practice financing guide.
DSCR questions dentists ask
What is a good DSCR for a dental practice loan?
1.25x is the common benchmark. A dental lender writing in ADA News describes it as a guideline, not a strict minimum. I treat anything below 1.25x as a plan that needs work, and I like to see room above it, because the ratio only gets tested once the practice is open and real expenses arrive.
Do lenders include personal living expenses in DSCR?
Many dental lenders look at global coverage, which adds your personal debts and living costs to the business loan payment. That is the version this calculator runs. Ask each lender which method it uses and what living-expense figure it will plug in.
How do I calculate DSCR for a dental startup with no history?
You use projections. Estimate first-full-year collections and overhead, size the loan from a real budget, and list your personal obligations. Lenders will test those projections against your production history as an associate and the market, so build them conservatively and document every assumption.
Does student loan debt affect my DSCR?
Yes, in a global calculation. Student loan payments count as personal obligations, so they reduce coverage the same way a car payment does. Ask the lender what payment it will use for your student loans, and enter that figure under other annual debt payments.
What happens if my DSCR is below 1.25x?
It does not automatically mean a decline, because 1.25x is a guideline. It does mean the plan is thin. Expect harder questions, a smaller loan, or conditions. The better move is to fix the plan first: borrow less, cut overhead assumptions you cannot defend, or lower personal costs.
Is this DSCR calculator a loan approval?
No. It is planning math. Only a lender can approve a loan, and each lender sets its own method and thresholds. I am not a lender, and I take no referral fees from lenders. The calculator tells you where you stand before you apply.
Close to the line, or not sure your inputs are right? Book a free Project Fit Call and we will look at your numbers together.
Sources
- ADA News, M. Jerkins, "Ask the Expert: How much debt is too much when buying a dental practice?" (June 9, 2026). adanews.ada.org
- Bankrate, "What is DSCR" (accessed 2026). bankrate.com
- Bank of America, "Dentist loans," Practice Solutions (accessed 2026). bankofamerica.com
- U.S. Small Business Administration, "Terms, conditions, and eligibility," 7(a) loan program (accessed 2026). sba.gov
- Starfield & Smith, "Best practices: a review of equity injection requirements under SOP 50 10 8" (2025). starfieldsmith.com
- Alithos Advisory, cost benchmark and estimator assumptions (2026). alithos.co
Every figure on this page comes from a cited source or is labeled as an Alithos planning assumption. How we research and update this page.