Classic Debt Service Coverage Ratio (DSCR) punishes growth SaaS: customer acquisition cost is expensed, so operating income looks negative and the ratio comes back below 1x. The EBITCAC framework reclassifies the growth portion of CAC as a capital investment. Enter your numbers to see how your coverage changes and roughly how much venture debt your business could service.
Can your SaaS service venture debt?
This is an illustrative model, not a financing offer. For the full method, read what DSCR SaaS venture-debt lenders actually require and the EBITCAC framework.
What is DSCR, and why do venture debt lenders care?
Debt service coverage ratio measures whether a business earns enough to cover its debt payments. A lender divides your operating income for a period by the principal and interest you owe over the same period: a DSCR of 1.0x means you earn exactly enough to service the debt, and most lenders want a cushion above that line. It is one of the first numbers underwriting looks at, because it answers the only question a creditor really has: can this company repay the loan out of its own operations?
Why classic DSCR breaks for growth SaaS
Standard DSCR treats customer acquisition cost as an operating expense. For a SaaS company growing on purpose, that is misleading. A business spending heavily to acquire customers with strong retention looks unprofitable on paper, so operating income turns negative and the ratio lands below 1x, even when the underlying unit economics are excellent. The math punishes exactly the companies that should qualify: efficient, fast-growing, retention-strong SaaS.
How the EBITCAC framework changes the picture
EBITCAC reclassifies the growth portion of customer acquisition cost as what it actually is, an investment in a durable, revenue-producing asset rather than a cost consumed in the period. Maintenance CAC, the spend needed to hold current revenue, stays an expense; growth CAC, the spend that builds future revenue, is treated as capital investment. Add that growth CAC back and the ratio reflects the real earning power of the customer base. That adjusted figure is what this calculator returns alongside the classic number.
How to read your result
- Classic below 1x, adjusted above 1x. The gap is your growth investment. The higher the adjusted figure, the more debt your operations could realistically service.
- Both below 1x. The issue is unit economics, not accounting. Work on CAC payback and retention before you raise debt.
- The serviceable-debt figure is a rough capacity estimate, not an offer. Real sizing depends on ARR, burn, retention, and the lender.
How to improve your SaaS DSCR
Two levers move it. Raising net revenue retention and gross margin lifts operating income directly, so more of your spend converts into coverage. Shortening CAC payback means less of your growth spend sits trapped as an in-period expense that drags the classic ratio down. Both are the same signals a lender underwrites, which is why a clean growth story earns better terms as well as a better ratio.
Frequently asked questions
What DSCR do venture debt lenders want to see? Most lenders look for coverage of 1.20x to 1.25x or higher once the loan begins amortising, so the business earns a healthy cushion over its principal and interest obligations. Early, interest-only facilities lean more on liquidity and growth than on a hard DSCR threshold.
Is a DSCR below 1x a dealbreaker for SaaS? Not for growth SaaS. On a classic calculation many fundable companies come back below 1x because customer acquisition cost is expensed. The adjusted, EBITCAC view is what shows your real capacity to service debt.
What counts as debt service in the ratio? Principal plus interest due over the period. During an interest-only window the service is interest only, which is why coverage looks easier early and tightens once the loan starts amortising.
Does this calculator replace a lender's underwriting? No. It is an illustrative model to frame the conversation and estimate rough capacity. Actual facility sizing depends on your ARR, burn, retention, and the individual lender.
What is the EBITCAC framework? EBITCAC is an underwriting framework used by CVF Fund that treats the growth portion of customer acquisition cost as a capital investment in a durable asset rather than an in-period expense, revealing the true earning power of a retained customer base.