decision
Project ROI & Growth-Capital Financing Calculator
The honest test for any growth-capital decision: does the project produce returns greater than its all-in financing cost, with survivable downside? This calculator runs Brian Kim's productive-debt framing against a specific project — project cost, expected monthly revenue, gross margin, ramp time, and financing terms — and outputs payback period, monthly cash flow after debt service, and whether the math actually pencils.
Educational estimate based on the inputs you entered — not financial, legal, or tax advice. Verify against your specific situation before acting on this output.
How it works
Methodology
Inputs
- Project cost
- Total capital deployed — equipment, build-out, marketing, inventory, etc.
- Expected monthly revenue (steady state)
- Run-rate revenue once the project ramps to plan.
- Gross margin %
- Revenue minus direct cost of delivering that revenue, expressed as a percentage.
- Ramp time (months)
- Months until the project is producing at the steady-state level.
- Financing APR and term
- If financed: APR and amortization length to compute monthly debt service.
Formula
Monthly contribution = Expected monthly revenue × Gross margin % Monthly cash flow after debt service = Monthly contribution − Monthly loan payment Payback period = Project cost ÷ Monthly cash flow after debt service (post-ramp)
Assumptions
- Ramp is modeled linearly — actual ramp curves are usually slower at the start.
- Doesn't model fixed-cost increases that come with the project (additional rent, payroll, insurance).
- Conservative inputs are how this calculator stays useful — running best-case numbers produces best-case verdicts.
Worked examples
Equipment expansion that pencils
- Project cost
- $60,000
- Expected monthly revenue
- $22,000
- Gross margin
- 55%
- Ramp time
- 2 months
- Financing APR
- 16%
- Financing term
- 48 months
Monthly contribution ~$12,100 vs ~$1,700 debt service. Payback ~6 months. Strong productive-debt math.
Frequently asked
Questions readers ask
When does borrowing for a business project make sense? +
When the project produces cash flow greater than the financing cost AND the downside scenario (e.g., 30% below plan) still services the debt. The framing isn't 'is debt good or bad' — it's 'does this specific dollar, at this specific cost, fund a use that returns more than it costs.' Use this calculator with conservative assumptions to test.
What ramp time should I assume? +
However long until the project is generating revenue at the projected level. For equipment purchases that immediately add capacity, ramp is often 0-1 months. For new locations, 3-6 months. For marketing-funded customer acquisition, 1-3 months. Conservative ramp assumptions catch overconfident projections.
What if the payback period is longer than the loan term? +
That's a warning sign, not an automatic disqualifier. If the project pays back after month 30 but the loan amortizes over 24 months, you're servicing debt from regular operating cash flow for the gap between loan maturity and payback — the project needs to already be self-funding by then. Run the calculator with a longer financing term or a smaller loan amount to see whether the monthly cash flow after debt service turns positive sooner.
Should I use best-case or worst-case revenue projections? +
Run both, but size the financing decision off the worst case. Best-case tells you the upside; worst-case (e.g., 30% below plan) tells you whether the debt is survivable if the project underperforms. A project that only pencils under best-case assumptions is the kind of overconfident projection this calculator is built to catch — see the first FAQ above.
Does this calculator account for taxes on the additional profit? +
No — the contribution and cash-flow figures are pre-tax. Financing decisions in this calculator are about whether the project's cash flow covers the debt service, which lenders also evaluate pre-tax. Your actual after-tax retained cash will be lower once federal, state, and (if applicable) self-employment tax are applied — factor that in separately, or check with a CPA, before assuming the full monthly cash flow after debt service is available to spend.
This tool is for educational purposes only and is not financial, legal, or tax advice. Final terms and eligibility depend on lender underwriting; consult a tax professional before acting on tax-tool output. ClearValue Lending is a funding platform.