Debt Capacity & Borrowing Eligibility Calculator
How much total debt funding can my business raise without straining cash flows or breaching bank covenants?
Financial Inputs
Audited annual gross revenue from sales and operations.
Normalised annual net profit after taxes available for business reinvestment.
Current total monthly EMI payouts on vehicle, machinery, or prior term debts.
Estimated borrowing cost from commercial banks or private debt funds.
Facility amortisation period in months.
Maximum Indicative Debt Capacity
Based on an estimated monthly operational profit of ₹15 Lakh, your allowable monthly debt headroom is approximately ₹5 Lakh.
Allowable Monthly Debt Headroom
₹5.00 L
Total FOIR Cash Servicing Limit
₹7.50 L
Average Monthly Operating Profit
₹15.00 L
Key Financial Takeaways
- Based on an estimated monthly operational profit of ₹15 Lakh, your allowable monthly debt headroom is approximately ₹5 Lakh.
- At 11% p.a. over 60 months, your indicative borrowing capacity is ₹229.97 Lakh.
- Existing monthly commitments of ₹2.5 Lakh have been deducted in full to maintain conservative credit metrics.
Worked Case Study & Financial Impact
Worked Practical Example:
With an annual net profit of ₹1.80 Cr (₹15 Lakh/month) and existing EMIs of ₹2.50 Lakh: a 50% FOIR allows ₹7.50 Lakh total monthly debt service. Deducting existing EMIs leaves ₹5.00 Lakh monthly headroom. At 11% p.a. over 60 months, the business can raise up to ₹2.29 Crore in new term debt.
Strategic Credit Meaning:
This indicates the maximum quantum an institutional credit committee will sanction on cash-flow underwriting before requiring additional equity infusion or balance sheet restructuring.
Variables Influencing Your Credit Sanctions:
- EBITDA Margins: Improving gross and operating margins directly expands monthly servicing capacity.
- Existing Debt Consolidation: Refinancing high-cost short-term debt into longer tenures frees up monthly headroom.
- Audited Track Record: Three consecutive years of profit growth unlocks higher FOIR tolerance (up to 60-65%).
Frequently Asked Questions
What is FOIR in corporate credit underwriting?
Fixed Obligations to Income Ratio (FOIR) measures what percentage of net operational cash flow can safely be committed to debt servicing. In commercial lending, 50% is standard; exceeding 65% is considered high-risk.
How does existing debt affect new facility sanctions?
Every rupee paid towards existing EMIs directly reduces the surplus cash available to service new debt, proportionally lowering your maximum borrowing capacity.
Can collateral increase borrowing capacity beyond cash flow limits?
While high collateral security improves asset coverage, banks in India follow cash-flow underwriting. Collateral mitigates recovery risk, but primary repayment must be supported by operational cash flows.
Related Financial Calculators
View All Tools →Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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