Debt-to-Income Ratio (DTI)

It shows how much of your personal paycheck already goes to debt before you take on a business loan.

Formal definition

DTI equals total monthly personal debt payments divided by gross monthly personal income, expressed as a percentage.

Why it matters

SBA and many business lenders require a personal guaranty — if your personal DTI is too high, they may decline even when the business looks healthy.

Where you see it

  • SBA loan applications with personal guaranty
  • Mortgage and auto underwriting
  • Personal financial statement reviews
  • Loan officer pre-qualification calls
  • MBA corporate finance and lending courses

Worked example

  1. Monthly personal income: $8,000.
  2. Monthly debt payments (mortgage, car, cards): $2,400.
  3. DTI = ($2,400 ÷ $8,000) × 100 = 30%.
  4. Interpretation: 30% is within the range most lenders accept for business borrowers.

How Business metrics calculates it

Monthly personal debt payments ÷ Monthly personal income × 100.

The range we use for status labels

On Business metrics, the status band for this KPI is roughly 0 to 36. Lower values are generally healthier in this band. Your niche can sit outside it honestly — the label is a prompt to read the coaching, not a certificate.

Where people fool themselves

DTI is a household ratio. Stuffing business gross sales into the income side is not how a consumer overlay works. Use personal income, and include car leases you keep forgetting.

Run it on your own numbers: Seeking a Loan.