How to calculate DSCR for commercial loans to avoid misjudging repayment capacity

When looking at DSCR for commercial loans, you can't just plug the numbers from the customer's tax returns into a formula. Many small businesses keep their reported taxable income very low, so there is a significant gap between actual cash flow and book net profit. Some customers also mix in one-time income, related-party transactions, and owner draws; it might look like they can cover the debt…