Entering a loan with interest-only payments Follow

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.

Entering a loan with interest-only payments

  1. In the Forecast tab, click Financingforecast-menubar-new-financing.png
  2. In the Financing page, click the Add Other button: 
  3. Give this segment of the loan a name
  4. Enter the interest rate
  5. 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. 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 full amount you will receive in the month in which you'll receive it. Click Next to continue: 
  7. 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:

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

  8. Click Save & Close.

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

In the Balance Sheet below, you can see that the principal balance of the loan remains constant until the end of the interest-only payments, and then it decreases when the interest-plus-principal payments begin:


More on customized loans:

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