Entering loans with custom terms

Custom loan terms allow for the precise modeling of financial obligations as they truly exist rather than forcing a fit into a standard mold. This feature ensures that financial forecasts are accurate and reflect the unique financial arrangements a business might have. LivePlan will still calculate the interest automatically if needed, but you can flexibly enter the loan's timing and payments.

Entering a loan with a custom disbursement or payment schedule

1. In the Forecast section, click Financing:
   
   
   
2. Click the Add Other button:

   
   
   

3. Enter a name for the financing:
   
   
   

4. Indicate the annual interest rate, if any:
   
   
   
5. Indicate whether you'll pay this financing back within 12 months:
   
   
   
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:
   
   
   
8. Click Next:
   
   
9. Enter the amount you plan to pay back each month or year against the balance:
   
   

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

10. Click Create & Exit. 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 automatically applies payments the month after receiving 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 section, click Financing:
   
   
   
2. Click the Add Other button:
   
   
   
3. Enter the name of the loan:
   
   
   
4. Enter the percentage to calculate interest on your loan and indicate whether you will repay the loan within 12 months. Then, click Next to proceed.
   
   

   Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. Long-term debt is considered a loan you'll pay back in more than 12 months. 

5. 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:
   
   
   
6. The final overlay represents your payment schedule. Enter the payments you'll be making in the months in which you'll make them:
   
   

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

7. Click Create & Exit:
   
   
   

Checking your work

In the Financing table, you will see your loan amount, a series of months without payments, leading into with payments following later:

Note: When you input a deferred payment loan, during the months of deferred payments, you will see negative numbers in brackets the Principal Paid line such as ($75) in this example. This represents the accruing interest adding to the total balance of your loan while you're not making payments.

Entering a deferred interest loan

When you enter a loan with a constant interest rate into your LivePlan forecast, the software will automatically begin applying interest the month after you receive the loan. However, some loans have interest rates that vary over time depending on the terms of the loan. A common version of this is when you're taking on a loan that won't accrue interest immediately (also known as "deferred interest"). As an example, here's how to represent that in your forecast.

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.

1. In the Forecast section, click Financing: 
   
   
   
2. On the Financing page, click the Add Loan button:
   
   
   
3. Give this loan a name:
   
   
   
4. Input when you will receive the loan, the amount received, as well as the term of the loan. In our example, we receive this loan in January 2024 in the amount of $15,000 with a term of 36 months:
   
   

   Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. Long-term debt is considered a loan you'll pay back in more than 12 months. 

5. Next, you will select the type of interest rate. Since this loan has zero interest to start and increases to 8% after 6 months, you will select Variable rate from the two options in order to represent this. 
   
   
6. In the table, input the interest rates to your loan according to the terms. In this example, we input 0% for the first six months and 8% for the remaining months of the 36 month term of our loan.
   
   
   
7. Click Create & Exit:
   

Checking your work

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

Note: You can create a deferred interest loan with an Add Other entry as well. And example where this would be used, would be in scenarios that required you to model a variable interest loan with a custom pay schedule. 

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 receive the loan. Sometimes, a loan agreement requires you to pay only the interest on the loan for a period of time and then start 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 six months. 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 are unsure of these amounts, you should consult your lender or search online for a loan payment calculator.

1. In the Forecast section, click Financing:
   
   
2. On the Financing page, click the Add Other button:
   
   
   
3. Give this segment of the loan a 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:
   

   Note: a loan you'll pay back within 12 months is considered short-term debt in your financial statements. Long-term debt is considered a loan you'll pay back in more than 12 months. 

5. The next overlay represents when you will receive the money. Enter the full amount you will receive in the month you'll receive it. Click Next to continue: 
   
   
   
6. The final overlay represents your payment schedule. Enter the payments you'll make in the months 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:
   
   Note: remember that interest payments typically begin the month after receiving the funds.
7. Click Create & Exit:
   
   

Checking your work

In the Financing table, you can see that the interest payment of $100 is fully paid for each month while making interest only payments. However, the principal of the loan is unaffected until the payments increase to start paying down the principal as well.

Note: notice the balance of the loan is unchanged until the payments increase in August to start paying down the principal along with monthly interest.

Where does this entry appear in the financial statements?

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

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

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 over 12 months will be divided into Short-Term Debt and Long-Term Debt. 

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

More on customized loans:

• Entering a pre-existing loan with customized payments