Banks don't grade you on one curve — they grade you against your industry.
The exact same numbers that get a dental practice approved can get a restaurant declined. Lenders calibrate every ratio to your sector — and most owners benchmark themselves against the wrong yardstick entirely.
Where US small businesses actually borrow
In fiscal year 2024, the SBA backed 70,242 7(a) loans worth $31.1 billion — an average of about $443,000 each. A handful of industries dominate the queue.
Share of SBA 7(a) loans by count, FY2024. Source: SBA data, via LendingTree analysis.
A "good" ratio doesn't exist in the abstract. It only exists relative to your industry.
Banks don't pull a single universal benchmark out of a textbook. They compare your numbers to industry peer data — most commonly the RMA Annual Statement Studies and their own internal sector portfolios — and adjust their thresholds accordingly. A net margin that's excellent for a grocery store would be alarming for a software firm. A debt load that's reckless for a restaurant is routine for a manufacturer sitting on hard collateral.
So the question is never just "is my DSCR good?" It's "is my DSCR good for a business like mine, judged by a lender who has seen a hundred others?" That is the lens most owners never get to look through — and it's exactly the lens we apply.
The same metric, read differently by sector
How a lender's focus shifts across the industries that borrow most. Benchmarks are typical and illustrative — real thresholds vary by lender and loan program.
| Industry | Typical net margin | What the bank watches most | Collateral profile | Make-or-break ratio |
|---|---|---|---|---|
| Restaurants & food serviceNAICS 72 | Thin (~3–6%) | High failure rate & volatile sales — wants a fat coverage cushion and strong owner liquidity and experience | Weak — mostly leasehold & used equipment, heavily discounted | DSCR ≥ 1.4×+, liquidity |
| Retail tradeNAICS 44–45 | Low–moderate | Inventory quality, seasonality, and margin erosion from online competition | Inventory (lent at ~50% or less) & receivables | Inventory turnover, current ratio |
| Health care & practicesNAICS 62 | Healthy & stable | Provider credentials, payor mix, personal credit — cash flow is reliable, so leverage is tolerated | Often light; goodwill/practice cash flow financed | DSCR (lenient), guarantor credit |
| ConstructionNAICS 23 | Variable, lumpy | Backlog quality, work-in-progress, receivables & retainage, bonding capacity | Equipment & receivables; project-dependent | Working capital, backlog, AR days |
| Professional servicesNAICS 54 | High | Key-person risk and client concentration — little to seize, so it leans on cash flow | Very light (asset-light, human capital) | DSCR, AR days, key-person |
| ManufacturingNAICS 31–33 | Moderate | Capacity utilization, customer concentration, and capital intensity — but rich in collateral | Strong — equipment & real estate | Debt/EBITDA, collateral coverage |
Identical numbers. Opposite decisions.
Two businesses walk into the same bank seeking the same loan, with the same headline financials. Watch what the industry lens does to the outcome.
Trattoria Bella
To a credit committee, a 1.20× coverage in a restaurant is dangerously thin. The sector has one of the highest failure rates, sales swing with the season and the economy, and if it folds there's almost nothing to seize — used kitchen equipment and a leasehold fetch pennies. The bank wants a far bigger cushion here, typically 1.4×+ DSCR and strong cash reserves, precisely because the downside is so unforgiving.
Riverside Dental
The identical 1.20× coverage is perfectly comfortable for a dental practice. Cash flow is recurring and insurance-backed, patient demand is stable through downturns, and practice failure rates are very low. Lenders routinely finance healthcare practices — often with lighter collateral — because the cash flow itself is the security. The same number that frightens them in a restaurant reassures them here.
Same DSCR. Same margin. Same credit score. Opposite decisions — driven entirely by the industry the numbers sit inside. This is why a generic "is my ratio okay?" answer is worthless, and why benchmarking yourself against the wrong sector is one of the most common — and most expensive — mistakes an owner can make.
You can't pass a test when you don't know which curve you're being graded on.
We score your business through the lens a lender actually uses for your industry — the right benchmarks, the right red flags, the right cushion — so you stop guessing against the wrong standard.
Get judged by your industry's rules — before the bank does.
We benchmark you against your sector the way a credit committee will, and tell you exactly where you stand.
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