---
policyId: LOS-DSCR-001
title: Standard Debt Service Coverage Requirement
policyFamily: Debt Service Coverage
position: Standard
approvalStatus: Approved
owner: Credit Risk
marketScope: National
lastReviewed: 2026-07-02
nextReview: 2027-01-02
usageCount: 58
tags: [dscr, coverage, standard, approved]
---

# Standard Debt Service Coverage Requirement

The borrower will maintain a debt service coverage ratio of not less than 1.25x, calculated as net operating income for the trailing twelve months divided by scheduled principal and interest on all Bank debt for the same period. The ratio is tested quarterly on the basis of a compliance certificate delivered with each quarterly financial statement.

## Use when

- The loan is a term loan or line of credit to an operating business.
- Quarterly financial statements are available within forty-five days of quarter end.

## Escalate when

Reject any reduction in test frequency, any restatement of the threshold in the reporting or definitions section rather than the financial covenant section, and any calculation basis other than trailing-twelve-month net operating income, without Credit Risk approval.