The metrics underwriters open first, explained simply.
Before a lender reads your story, they read your numbers. A short list of metrics does most of the work of deciding whether a small business is fundable. Here are the five that matter most, what each one means, and the target to aim for. Knowing them turns a black-box decision into something you can prepare for, well before you apply.
DSCR answers one question: does your cash flow cover your debt? It divides the income available for debt payments by the payments themselves. A DSCR of 1.0 means you break even, with no cushion if a month goes soft.
A healthy DSCR is at or above 1.25. That 25 percent margin tells an underwriter you can absorb a slow stretch and still make payments. It is often the first number a lender calculates, and the one most worth improving before you apply.
DTI looks at how much of your income is already promised to debt. For small business lending it often blends business and the owner's personal obligations. The more of your income that is spoken for, the less room a lender sees for a new payment.
A common target is a DTI at or below 25 percent. Lower is stronger. If yours is high, paying down or restructuring existing debt before applying usually does more for your odds than any pitch.
NSFs are the bounced or returned transactions on your bank statements. Lenders pull statements precisely to count them, because they are a direct, hard-to-fake signal of how tight cash gets day to day.
The bar is low on purpose: many lenders want to see two or fewer NSFs across the recent period, and zero in the last 30 days. A clean stretch of statements is one of the simplest ways to strengthen a file.
Not a ratio, but a number a lender cares about deeply: how much you are asking for, and exactly what it buys. Capital tied to a specific, revenue-producing use reads very differently than a round number with no plan behind it.
Be precise. "Forty thousand for two delivery vehicles that add fifteen percent route capacity" gets funded. "Some working capital" does not. The clearer the use, the lower the perceived risk.
Lenders read the direction of your revenue, not just the size. Flat or growing tells a stable story; a recent decline raises questions the rest of the file has to answer.
You do not need explosive growth. Steady or upward over the trailing months, with seasonality explained, is what an underwriter wants to see. If revenue dipped, a short note on why and how it recovered goes a long way.
Individually, these five are signals. Together, they are a picture. The BRAIN Scorecard weighs them alongside the rest of its 36 criteria across five pillars and rolls everything into a single Readiness Score from 0 to 100, with the top drivers of your result. It takes about 12 minutes and pulls no credit, so you can see exactly where these numbers leave you before a lender ever does.
Most lenders look for a Debt Service Coverage Ratio at or above 1.25, meaning your income covers your debt payments with a 25 percent cushion. At 1.0 you only break even, which reads as risky; comfortably above 1.25 gives you room to absorb a slow month.
An NSF is a non-sufficient-funds event, a returned or bounced transaction on your bank statement. Lenders count them because they are a direct measure of how tight cash gets. A common target is two or fewer in the recent period and zero in the last 30 days.
For most small business lending, both. Business activity and bank statements carry the file, but the owner's personal credit is usually still part of the picture, especially for younger businesses. Knowing where both stand before you apply lets you address the weaker one first.
The free BRAIN Scorecard checks all five against the targets lenders use, with no credit pull, and rolls them into one Readiness Score.
Versatil Readiness LLC provides educational business consulting and software-supported readiness analysis. Versatil Readiness LLC is not a lender, bank, SBA lender, CDFI, underwriter, broker-dealer, law firm, CPA firm, credit repair organization, debt settlement company, investment adviser, financial planner, or credit reporting agency. Nothing on this site constitutes financial, legal, tax, accounting, or investment advice; a credit decision, credit score, credit report, or underwriting determination; or an approval, denial, pre-approval, or prequalification from any lender. Any decision to apply for, accept, or take on financing is made solely by the client with third parties.