How To Calculate Your Return On Investment (ROI)


Investments infused in a business may come in different forms, some more sophisticated than others like real estate, stock and bonds, or even specialized training and experience. But in simple layman’s terms, it’s really about the allotment of funds, usually money utilized to get profitable returns. If, say, you had invested $1000 into a business venture and this becomes $1200 at year’s end, your return on investment (ROI) would have been 20%. Of course, as it happens in business, your ROI could either be positive or negative. The operative formula is Net profit/total investment = ROI. Net profit being determined after you deduct your costs and expenses.

Small business loan as an investment

As much as allotment of funds are regarded as investments, taking a small business loan to boost a company’s operations or to expand and grow the business is today also considered to be a sound investment. Sure, loans have interest costs, but if the business company’s bottom line ultimately comes out looking like “a million bucks” after all the costs and expenses are taken out, you could have a great ROI!

So, while investment simply spells money of which you may or may not have, know that small business loans are generally available if you are considering investing in more machines or added personnel for your growing business to expand to other markets and strengthen your position. And to know what sort of investment you will have to be putting in, let the Small Business Loan Calculator do the work for you.

The Small Business Loan Calculator

You’ve got a great product or service in the market, widely accepted and highly preferred by clients and consumers. You’re planning to invest in some research that will lead to the creation and introduction of a product or service extension. But you lack additional funding. What’s your next move? Get a small business loan but make sure what this investment will exactly entail, what its cost will be to your company. What you don’t want to do is leap before looking so … use the practical, convenient loan calculator. It will show you what the loan total cost will be, how the monthly payments will look like and what sort of monthly interest will apply.

Here’s how it works: Fill in the blanks in the space provided with the following entries:

  • Your desired loan amount
  • Your preferred number of payments (There’s a set of 24-60 monthly payments. Simply select your preference).
  • Your interest rate monthly (What you’ll see is a choice between 1% or 2.1%. Know that either one is the going rate for most borrowers, however as you may well be aware of – the higher the credit standing, the lower the interest rate is usually the operating principle. Just the same, choose either for purposes of calculating your loan cost.
  • Click Calculate

Evaluate the results

In a very simplified format, the results will be a payment scenario that will reflect the monthly payments you will have to make, the total cost of the loan at the term’s end and a few minor costs (if any) such as documentation or closing administrative fees.

Since you intend to use this loan as an added investment into your business, take a good look at the numbers. Evaluate them carefully, make sure they are pretty aligned with what you have in mind and with your capacity to pay it back. If not, click Reset Calculator and run through another set of entries. You’ll get a different scenario. You may reset this till you’re satisfied the numbers that come out are those that will be most viable given your situation.

Suzanne Llanera is a writer for Camino Financial, an online lender for small business loans.