Entering a loan with deferred interest

When you enter a standard loan into your Upmetrics forecasting tool, the software will automatically begin applying interest the month after you receive the loan. If you're taking on a loan where you won't accrue interest right away (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, $10,000 loan with interest deferred for the first six months. In the first six months, we'll make payments of $500.00 per month. After that, the loan will have 12% interest and our payments will drop to the amount calculated by Upmetrics.

Entering a deferred interest loan:

Entry #1: Interest-deferred portion

1

Under the working capital tab of financial forecasting tool, Click on the Funding tab, and then click Add Funding Button:

2

Enter a name for the loan(borrowed on interest), and select funding type as Other Financing(Borrowed) and then click on Next:

3

Click Next.

4

Enter the annual interest rate(If your loan will have interest calculated on it, enter that percentage. If your loan will have no interest, enter a zero) and also indicate whether you'll pay this financing back within 12 months:

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.

5

Click Save.

6

Amount Received: 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, Upmetrics will automatically calculate interest on the loan and other parameters using the standard loan formula:

7

Amount Repaid: Enter the amount you plan to pay back each month or year against the balance, The final overlay represents your payment schedule. Enter the interest-free payments you'll be making in the months in which you'll make them. Then, in the month following the last interest-free payment, enter the balance of the loan to be paid. (This may seem strange, but we'll represent this balance again in the second loan entry.)

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

Whatever updates you make in the excel sheet are set on autosave mode. Close the overlay.

Entry #2: Portion with interest

1

Under the working capital tab of financial forecasting tool, Click on the Funding tab, and then click Add Funding Button:

2

Enter a name for the loan, and select funding type as Loan and then click on Next:

3

Enter a loan amount that is the portion of the loan on which you'll pay interest and also enter the interest you'll pay:

4

Assign a start date for this portion of the loan. It should be a month in which the loan begins to have interest applied -- which is usually the month after the last interest-deferred payment.  and the length of the loan:

5

Click Save & Close