Microlending Break-Even Analysis: Break Even Around Month 24

Fixed costs $45.2K/mo Base overhead

Contribution margin 82% After variable costs

Break-even revenue $55.1K/mo Monthly target

Break-even timing Month 24 Model break-even

Break-even calculator

Test monthly interest income against lending costs and the fixed cost base to see when microlending breaks even.

Lean Base Full

Monthly revenue Interest income is the pool that covers losses and overhead. $ Low revenue High revenue Variable expenses Defaults and acquisition costs rise with new lending volume. $ Low costs High costs

Money available to cover fixed costs $237,307 $269,667 revenue - $32,360 variable expenses

Margin ratio

88%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base your margin has to cover. $ Low fixed High fixed

Break-even chart Revenue Total costs

Which microlending expenses are fixed, and which move with loan volume?

Cost classification

Break-even is reliable only if charge-offs, acquisition spend, and staffing steps land in the right buckets. Here, the Month 24 break-even depends on separating margin pressure from monthly overhead.

Expense	Cost	Break-Even Treatment	Common Mistake
Technology Platform Hosting	Fixed	Include $3,000 per month in overhead before testing contribution coverage.	Scaling it with every new loan instead of treating it as base platform spend.
Data Security & Compliance	Fixed	Include $1,500 per month in fixed operating overhead.	Leaving compliance out until after break-even, which understates the revenue hurdle.
Legal & Advisory Fees	Fixed	Include $2,000 per month as recurring overhead across Month 1 to Month 60.	Treating recurring advisory work like one-time launch spending.
Salaries and Operating Headcount	Semi-fixed	Model staffing as capacity steps, rising from $425,000 in the first year to $777,500 in Year 2.	Averaging payroll too smoothly and missing the break-even hit when new roles start.
Loan Defaults & Charge-offs	Variable	Deduct from contribution margin at 10.0% in Year 1 and 8.0% in Year 2.	Treating charge-offs like overhead instead of direct margin pressure.
Digital Acquisition Costs	Variable	Deduct from contribution margin at 8.0% in Year 1 and 7.0% in Year 2.	Using a flat marketing budget while borrower growth drives spend.
Collections Workload and Servicing Tools	Semi-variable	Keep a base servicing layer, then add workload as the loan portfolio grows.	Ignoring servicing strain until delinquencies create higher support and collections needs.

How does break-even change from lean to full-scale microlending?

Scenario table

Bigger loan books lift revenue, but break-even still depends on loss control because staffing and compliance costs rise with scale. The base case is the closest watch point, while full scale only works if underwriting stays tight.

Planning assumptions only; actual loan demand, loss rates, and funding costs can move these numbers.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean microlending build	$394k	$71k	$452k	82%	-$349k	Still loss-making, so break-even needs faster loss cuts.
Base microlending case	$1.23M	$184k	$746k	85%	-$309k	Closest to break-even; Month 24 is the key check.
Full-scale microlending case	$2.75M	$330k	$902k	88%	$375k	This is the first clear cushion, if losses stay low.

What breaks the microlending break-even plan?

Stress test

The plan is most exposed to slower loan income, higher charge-offs, and fixed cost creep. In Year 2, the model still shows a -$309,000 EBITDA gap, so even small misses can push Month 24 break-even out.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,053,000	$364,000 gap	Year 2 still runs below break-even.
Revenue shortfall	Loan income drops 20% from slower originations.	$1,053,000	$501,000 gap	Weak demand pushes the break-even date later.
Fixed-cost pressure	Payroll, compliance, hosting, audit, and legal run 10% over plan.	$1,158,000	$469,000 gap	Overruns lift the revenue bar fast.
Margin pressure	Defaults rise to 10% and digital acquisition to 9% in Year 2.	$1,105,000	$416,000 gap	Higher losses cut contribution and slow breakeven.
Combined pressure	Revenue falls 20%, fixed costs rise 10%, variable losses hit 19%, and debt costs jump to 14.0%.	$1,217,000	$665,000 gap	This case delays Month 24 break-even and deepens the Year 2 shortfall.

Can you prove borrowers, collections, funding, and cash hold up before you add loan officers and fixed overhead?

Founder checklist

Don’t add overhead or loan capital until the first-year $1.5M book and Year 2 $5.0M book are believable. The model stays negative in Years 1 and 2, so break-even depends on tight underwriting, loss control, and enough cash to reach Month 24.

1Borrower Demand$1.5M

Verify funded demand can fill the first-year loan book across all five loan types before you scale to the Year 2 book.

2Unit Spread18%

Check that the Year 1 variable load from 10% defaults and 8% acquisition costs still leaves enough spread for fixed costs.

3Debt Cost8.25%-14.00%

Secure committed capital before you rely on debt priced in this Year 2 range, or the loan book can stall when demand rises.

4Fixed Load$74.6K/mo

Hold off on office, platform, and hiring ramp if the Year 2 monthly fixed load cannot be covered by funded volume.

5Collections10%→3%

Set the follow-up and recovery steps now so defaults can move from Year 1 to Year 5 without blowing up cash.

6Reserve Cushion$49.11M

Keep enough cash to clear the model’s minimum point in Month 12, because break-even does not arrive until Month 24.