How Much Of A Business Loan Can I Get?

When you’re comparing business loan options, it’s easy to focus on how much funding you qualify for. But affordability depends on more than approval limits — it comes down to cash flow, existing debt, and how new payments will affect your business over time.

In this guide, we’ll walk through a few key calculations lenders use to evaluate affordability and how you can use the same metrics to decide whether a business loan makes financial sense.

Is A Small Business Loan Right For Me?

Before you calculate affordability, it’s worth stepping back to decide whether a loan is the right move for your business at all. Being able to qualify for financing doesn’t automatically mean borrowing is the best option.

Start by looking at the problem you’re trying to solve:

• What specifically would the loan be used for?
• Are there lower-risk ways to address that issue, such as cutting expenses or improving cash flow?
• Would a different type of funding be a better fit?

For example, startups may want to consider alternatives like investors or crowdfunding, while businesses struggling with cash flow should first review operating costs and pricing before taking on debt.

If you do decide to borrow, make sure the loan aligns with both your short-term needs and long-term business goals. A clear business plan can help you evaluate whether financing will support growth or simply add financial pressure.

What Do Small Business Lenders Look For?

At a basic level, lenders want to know two things: whether your business can afford the loan and whether you’re likely to repay it on time.

To make that determination, lenders typically evaluate:

• Cash flow, to ensure monthly payments can be covered comfortably
• Credit history, including business (and sometimes personal) credit scores
• Debt service coverage ratio (DSCR), which shows how income compares to existing debt obligations
• Debt-to-income (DTI) ratio, particularly for sole proprietors and small operators
• Collateral or personal guarantees, depending on the loan type

Together, these factors help lenders assess risk and decide how much they’re willing to lend — and on what terms.

How To Calculate Borrowing Amount With DSCR

The debt service coverage ratio (DSCR) is one of the primary metrics lenders use to assess whether your business can afford new debt. It measures how your income compares to your existing debt obligations and helps lenders evaluate risk.

You can use the same calculation to determine whether taking on a loan makes financial sense and how much additional debt your business can realistically handle.

How To Calculate Borrowing Amount With The DTI

In addition to DSCR, lenders may look at your debt-to-income (DTI) ratio, especially if you’re a sole proprietor or personally guaranteeing a business loan. DTI compares your monthly debt obligations to your personal income and helps lenders assess whether you can afford additional payments.

While DTI is most commonly used for personal loans and mortgages, it still plays a role in small business lending when business and personal finances overlap.

How To Calculate Borrowing Amount With Your ROI

Beyond affordability, a business loan should make financial sense. The goal is for the return on investment (ROI) from the loan to outweigh its total cost, including interest and fees.

Before borrowing, be clear about:

• How the funds will be used
• How that investment will increase revenue, reduce costs, or improve efficiency
• Whether the expected gains exceed the loan’s total repayment amount

If you can’t reasonably connect the loan to a measurable business benefit, taking on debt is likely to create financial pressure rather than growth. A clear plan for how the loan supports your business goals is essential before moving forward.

What If I Can’t Afford A Loan?

If a loan doesn’t make sense today, that doesn’t mean it never will. There are several ways to strengthen your financial position so borrowing becomes more realistic in the future.

Common steps include:

• Increase revenue: Higher income improves cash flow, raises your DSCR, and lowers your DTI, all of which can improve approval odds.
• Reduce existing debt: Paying down current obligations can free up cash flow and make room for new financing.
• Lower operating expenses: Cutting unnecessary costs increases net operating income, which directly improves DSCR.
• Improve personal or business credit: Stronger credit can unlock better loan options and more favorable terms.
• Borrow less: If a smaller loan still meets your needs, reducing the loan amount can make payments more manageable.

If none of these adjustments are feasible right now, it’s usually better to pause and focus on improving fundamentals than to take on debt that adds financial strain.

Final Thoughts On Calculating How Much You Can Borrow

Before applying for a business loan, make sure you can confidently answer yes to the following:

• Your DSCR is 1.25 or higher
• Your DTI is 36% or lower
• You can provide collateral or a personal guarantee, if required
• The loan is expected to generate a positive return on investment

If these boxes are checked, your business is likely in a solid position to take on new financing. Use DSCR and DTI calculations to estimate a realistic loan size before applying, and compare options carefully to find terms that fit your cash flow.

You can also use our small business loan calculators to model payments and borrowing scenarios before speaking with a lender.