Entering loans with custom terms

The standard loan entry in LivePlan calculates equal monthly payments. But let's say you want to set up a loan with quarterly payments, or a balloon payment at the end. Perhaps your loan will have multiple disbursements. Or perhaps your loan will have deferred interest or interest only payments. You can always use the flexible Add Other option to enter a loan with custom disbursement and repayment terms. 

LivePlan will still calculate the interest automatically if you need, but you'll be able to enter the loan's timing and payments flexibly.

Entering a loan with a custom disbursement or payment schedule 

  1. Click on the Forecast tab, and then click Financing:
    Forecast > Financing.png
  2. Click the Add Other button:

    Select

  3. Enter a name for the financing:
    What

  4. Indicate the annual interest rate, if any:
    enter
  5. Indicate whether you'll pay this financing back within 12 months:
    Do
  6. Click Next.
  7. Enter the amount of money you'll receive and when you'll receive it. You can enter a single amount in a single month or amounts in multiple months, depending on how your loan is structured:
    received
  8. Click Next.
  9. Enter the amount you plan to pay back each month or year against the balance:
    loan

    Note: the default setting in LivePlan is for one year of monthly detail. If you need more years of monthly detail in order to enter future payments more accurately, you can easily change that setting.

  10. Click Save & Close. This loan and its payments will be displayed in the Financing table.

 

Entering a deferred payment loan

In LivePlan, when you enter a standard loan into your forecast, the software will automatically begin applying payments the month after the receipt of the loan. If you're taking on a loan where you won't make payments right away (also known as "deferred payments"), the Add Other financing entry will allow you to represent that.

  1. In the Forecast page, click Financing:
    Forecast > Financing.png
  2. In the Financing section, click the Add Other button:
    financing
  3. Enter the name of the loan:
    tell
  4. If your loan will have interest calculated on it, enter that percentage. If your loan will have no interest, enter a zero.
  5. Then, click the button to indicate whether you will pay the loan back within 12 months or not. Click Next to continue:
    loan
    Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. A loan you'll pay back in more than 12 months is considered long-term debt. Read What is the difference between short-term and long-term debt?
  6. The next overlay represents when you will receive the money. Enter the loan amount you'll receive in the month you'll be receiving it. Click Next to continue:
    deffered
  7. The final overlay represents your payment schedule. Enter the payments you'll be making in the months in which you'll make them:
    deferred
    Note: If you aren't sure of your payment amounts, you may want to consult your lender, or do an online search for a loan payment calculator.
  8. Click Create & Exit.

In the Financing table, you will then see your loan amount, with payments following later:

deffered

 

Entering a deferred interest loan

When you enter a standard loan into your LivePlan forecast, the software will automatically begin applying interest the month after you receive the loan. If you're taking on a loan that won't accrue interest immediately (also known as "deferred interest"), here's how to represent that in your forecast.

Note: representing a deferred interest loan will require two separate financing entries: 

  • One for the interest-free portion of the loan
  • One for the portion of the loan with interest

In the example below, we'll enter a 36-month, $15,000 loan with interest deferred for the first six months. In the first six months, we'll make payments of $750.00 per month. After that, the loan will have 8% interest, and our payments will change accordingly.

Entry #1: Interest-deferred portion

  1. In the Forecast page, click Financing
    Forecast > Financing.png
  2. In the Financing section, click the Add Other button:
    add_other.png
  3. Give this segment of the loan a name:
    name
  4. Enter a zero for the interest rate on this segment, then click the button to indicate whether you will pay the loan back within 12 months or not. Click Next or Funding to continue:
    set
    Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. A loan you'll pay back in more than 12 months is considered long-term debt. For more details, see What is the difference between short-term and long-term debt?
  5. The next overlay represents when you will receive the money. Enter the full value of the loan in the month you'll receive it. Click Next to continue:
    deferred
  6. The final overlay represents your payment schedule. Enter the interest-free payments you'll make in the months you make them. Then, in the month following the last interest-free payment, enter the loan balance to be paid. (This may seem strange, but we'll represent this balance again in the second loan entry.)
    deferred
  7. Click Create & Exit.

 

Entry #2: Portion with interest

  1. In the Financing section, click the Add Loan button:
    financing
  2. Give this segment of the loan a name:name
  3. Enter the interest rate on this segment, then click the button to indicate whether you will pay the loan back within 12 months or not. Click Next or Funding to continue:set
  4. Then, in Funding, enter the loan's remaining balance in the month that interest will begin accruing and click Next or Payments to continue:deferred
  5. Then enter your payment amounts for the remaining months of the loan: deferred
  6. Click Create & Exit.

The Financing table below shows no interest charges applied until after the first six months.

financing

Entering a loan with interest-only payments

When you enter a standard loan into your LivePlan forecast, the software will automatically begin applying interest and calculating payments the month after you've received the loan. Sometimes, a loan agreement will have you paying only the interest on the loan for a period of time, and then starting to make payments against the principal later. Here's how to represent that kind of loan in your forecast.

In the example below, we'll enter a 36-month, $10,000 loan with 12% interest. We'll make interest-only payments for the first 6 months. In order to enter this loan into the forecast, we'll need to know two things ahead of time:

  • The amount of the interest-only payments
  • The amount of the interest-plus-principal payments

If you aren't sure of these amounts, you may want to consult your lender, or do an online search for a loan payment calculator.

  1. In the Forecast page, click Financing: Forecast > Financing.png
  2. In the Financing section, click the Add Other button:
    financing
  3. Give this segment of the loan a name: name
  4. Enter the interest rate then, click the button to indicate whether you will pay the loan back within 12 months or not. Since our example is a 36-month loan, we've clicked "No" here. Click Next to continue:set
    Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. A loan you'll pay back in more than 12 months is considered long-term debt. Read What is the difference between short-term andlong-term debt?
  5. The next overlay represents when you will receive the money. Enter the full amount you will receive in the month in which you'll receive it. Click Next to continue: 
    interest
  6. The final overlay represents your payment schedule. Enter the payments you'll be making in the months in which you'll make them. The example below shows interest-only payments in the first six months, and the interest-plus-principal payments in the remaining months:
    loan

    Note: remember that interest payments typically begin in the month after you've received the funds.

  7. Click Create & Exit.

In the Profit & Loss table below, you can see that the interest calculates starting with the month after the money is received:

interest

In the Balance Sheet below, you can see that the principal balance of the loan which will remain constant until the end of the interest-only payments. Then it will decrease when the interest-plus-principal payments begin:

interest

 

Where does this entry appear in the financial statements?

(For more details, read How LivePlan handles loans and other financing.)

When you enter a custom loan, only the interest portion will appear in your Profit and Loss table. This is because the interest is the only true cost your business incurs in the loan:

P_and_L_interest_expense_highlighted.png

Loans will appear on one or two lines of the Balance Sheet, depending on their length. A loan that will be paid back within 12 months appears as Short-Term Debt. A loan of longer than 12 months will be divided into Short-Term Debt and Long-Term Debt. For more on this, read What is the difference between short-term debt and long-term debt?

Balance_sheet_debt_highlighted.png

In the Cash Flow, similarly, loans (or portions of loans) may be considered Short-Term Debt or Long-Term Debt:

Cash_flow_debt_highlighted.png

More on customized loans:

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