Test whether the extra profit a loan produces will repay its cost and how long that takes.
A loan is worth taking when the profit it produces exceeds what it costs. This calculator compares the full cost of borrowing, meaning interest plus fees, with the additional annual profit you expect the borrowed money to generate, such as a new machine, extra inventory or a second location.
How it works: enter the total cost of the loan (the payment calculator on this site gives you total interest plus fees), any offsets such as a grant or tax benefit, the extra profit per year you realistically expect, and how fast that profit might grow. The tool subtracts offsets from cost to get the net cost, then adds up yearly profit until the cumulative total passes the net cost. That crossover is your break-even time.
Worked example (illustrative): a $28,000 total borrowing cost against $15,000 of extra yearly profit breaks even in a little under two years. Over seven years, with 3% annual growth, cumulative extra profit would be well above the cost.
Limits: the tool counts extra profit only, not the return of the principal itself, and it cannot judge how reliable your profit forecast is. Run a pessimistic case with profit cut by a third or more.
Calculators and Product Comparison
Explore alternatives to a traditional business term loan, including credit lines, equipment financing, invoice factoring, microloans, grants and internal fixes, with trade-offs.
Calculators and Product Comparison
Use break-even analysis to decide whether a business loan will pay for itself, with formulas, a worked equipment example and a pessimistic stress test.
