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How much can my business borrow?
Borrowing capacity is not a percentage of revenue. It is the principal your normalized cash flow can service at a lender's required coverage ratio, at the rate and amortization actually on offer. This page shows the arithmetic and lets you run your own numbers.
How do lenders decide how much a business can borrow?
A commercial lender starts with normalized EBITDA, deducts maintenance capital expenditure and cash taxes to reach cash flow available for debt service, divides by the minimum debt service coverage ratio it requires, and subtracts debt service already committed. What remains is the annual payment available for new debt. Rate and amortization convert that payment into a principal amount.
Collateral, customer concentration, receivables quality, industry and management depth then adjust the result — usually downward, occasionally upward where security is strong.
The calculator
Run your own numbers
Figures are indicative and educational. They are not an offer of financing, a pre-approval, or a statement of what any lender will do.
After removing one-time items a lender is likely to accept.
Unfinanced capital spending needed to sustain operations.
Principal and interest already committed.
Commonly 1.15x – 1.35x in Canadian commercial credit.
Indicative additional borrowing capacity
$3,523,865
The principal that the remaining annual payment supports at the rate and amortization entered. Collateral coverage, concentration and lender policy can reduce this materially.
Cash flow available for debt service: $715,000
Annual payment available for new debt: $392,000
Educational estimate only. Unity Global Financial is an independent capital advisory and structuring firm, not a bank or direct lender, and nothing on this page is a commitment, quotation or approval.
Sensitivity
What moves the number most
Same business, one variable changed at a time. Amortization and coverage ratio usually matter more than rate.
| Change | Effect on capacity | Why |
|---|---|---|
| Amortization 5 yrs → 15 yrs | Large increase | The same annual payment retires principal far more slowly, so it supports more of it. |
| Target DSCR 1.35x → 1.15x | Meaningful increase | More of the cash flow is released to service new debt. |
| Rate 7.5% → 9.5% | Moderate decrease | More of each payment is interest rather than principal. |
| $90,000 owner salary normalization | Moderate decrease | Reduces normalized EBITDA, and therefore every downstream figure. |
| Retiring a short-amortization lease | Increase | Frees committed debt service without reducing earnings. |
| Customer at 40% of revenue | Decrease or structural change | Concentration risk often reduces advance rates or adds security requirements. |
Questions people ask
Borrowing capacity, answered directly
How much can my business borrow?+
Most Canadian commercial lenders size a term facility from cash flow: they take normalized EBITDA less maintenance capex and cash taxes, divide by the debt service coverage ratio they require, and solve for the loan payment that leaves. That payment, at the amortization and rate offered, sets the principal. Collateral then caps the result.
Is borrowing capacity based on revenue?+
Rarely. Revenue is a scale indicator, not a repayment source. Cash flow after sustaining capital expenditure and taxes is what services debt, and it is what a credit adjudicator sizes against. A business with $12M of revenue and 4% margins may support less debt than one with $4M of revenue and 20% margins.
What is the difference between debt capacity and debt service capacity?+
Debt service capacity is the annual payment your cash flow can support. Debt capacity is the principal amount that payment buys, which depends on the interest rate and amortization period offered. The same cash flow supports materially more principal over a 15-year amortization than over five years.
Why do lenders arrive at a smaller number than I expect?+
Usually three reasons: add-backs you consider one-time are not accepted, maintenance capital expenditure is deducted from earnings, and existing obligations — leases, shareholder loan servicing, operating line interest — are counted in full. Collateral shortfalls or customer concentration can then reduce the facility further.
Does collateral increase borrowing capacity?+
It can change the structure rather than the total. Real property, equipment and receivables support asset-based advances at defined margins, which may deliver more capital than a cash-flow term loan alone. But a lender still needs a repayment source; collateral is the fallback, not the rationale.
How can a business increase its borrowing capacity?+
Improve normalized EBITDA, extend amortization on existing debt, retire short-amortization or high-rate facilities, reduce customer concentration, clean up receivables aging, and document add-backs so they survive review. Most of these take one to three quarters, which is why capacity is best assessed well before the need.
Next: calculate your DSCR, review how receivables affect capacity, or start with the free Capital Readiness Score.
Methodology and review
Indicative borrowing capacity is derived from normalized EBITDA, a target debt-service coverage ratio, and prevailing amortization and pricing ranges observed in the Canadian commercial market. Figures are indicative and are not a credit decision.
Reviewed by the Unity Global Financial capital advisory team. Unity Global Financial is an independent capital advisory firm working with Canadian commercial, business, securities-backed and alternative capital sources. We are not a bank, a direct lender, or a securities dealer, and nothing on this page is legal, tax, accounting or investment advice.
Last reviewed: August 2026
A capacity estimate is a starting point. A defensible range is the deliverable.
The Capital Snapshot analyses your actual statements and produces a borrowing range with base, revenue-decline and rate-increase scenarios.
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