Debt Covenant Cure Cost Calculator

Breaching a DSCR or LTV covenant triggers default — quantify the equity cure required.

Current NOI (annual)

Annual debt service

Required DSCR

Loan balance

Loan rate %

Cash cure required

$1,142,857

EBITDA cure required

$100,000

Current DSCR

1.15

How the math works

EBITDA cure = NOI gap. Cash cure = debt service reduction needed / loan rate.

$1M × 1.25 = $1.25M required NOI − $1.15M = $100k EBITDA cure. Cash cure ≈ $100k/0.07 = $1.43M.

How to Use

Enter current NOI.
Enter annual debt service.
Enter required DSCR covenant.
Enter current loan balance.
Enter equity cure EBITDA multiple.
Read cure amount required.

Frequently Asked Questions

What is a covenant cure?

When a borrower breaches a financial covenant (DSCR, debt yield, LTV, leverage ratio, EBITDA-based), most credit agreements allow an equity cure — sponsor injects fresh equity, which either (a) reduces debt (cash cure), (b) is deemed to add to EBITDA for covenant compliance (EBITDA cure), or (c) replaces missing cash flow. Cure right typically 2-4 uses over loan life, max once per test period.

Cash cure vs EBITDA cure?

Cash cure: equity paid to reduce principal → lower debt service → higher DSCR next test. Clean but expensive (full paydown). EBITDA cure: equity added synthetically to EBITDA in covenant calc for that test period only. Cheaper (only covers the shortfall) but controversial; many credit agreements prohibit. Modern liquidity-focused loans use cash cure only.

Sizing the cure?

DSCR breach: cure = shortfall below covenant, annualized and translated to principal paydown. Example: current DSCR 1.15, covenant 1.25, debt service $1M → required NOI $1.25M, actual NOI $1.15M, $100k gap. Cash cure = $100k/loan rate = ~$1.4M principal paydown at 7%. Equity cure (EBITDA) = $100k only. Huge difference, dictates structure.

After cure?

Covenant complied-with at test date. Borrower remains in default for notice purposes but cured. Most agreements: successful cure = no event of default, no acceleration, no default interest, no cross-default. Failed cure: acceleration, cross-default, DIP financing discussion. Lender may charge cure fee (0.5-2% of loan) and require additional reporting. Cure events limited to prevent serial abuse.