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:
    Forecast > Financing.png

  2. Click the Add Other button:

    financing page add other highlighted .png

  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:
    Next button .png

  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:
    Next button .png
  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 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.
    create and exit.png

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:
    Forecast > Financing.png

  2. Click the Add Other button:
    financing page add other highlighted .png

  3. Enter the name of the loan:
    tell

  4. Enter the percentage to calculate interest on your loan. If there is no interest, enter zero.

  5. Click the button to indicate whether you will repay the loan within 12 months. Then, click Next to proceed.
    loan
    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. 
  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 search online for a loan payment calculator.
  8. Click Create & Exit:
    create and exit.png

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 section, click Financing
    Forecast > Financing.png

  2. On the Financing page, click the Add Other button:
    financing page add other highlighted .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. 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. 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 value of the loan in the month you'll receive it. Click Next to continue:
    create new funding source add other financing.png

  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:
    create and exit.png

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:
    create and exit.png

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 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: Forecast > Financing.png

  2. On the Financing page, 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. 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: 
    create new funding source add other financing.png

  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:
    loan
    Note: remember that interest payments typically begin the month after receiving the funds.
  7. Click Create & Exit:
    create and exit.png

In the Profit & Loss table below, you can see that the interest is calculated 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 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.)

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:

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 over 12 months will be divided into 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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