Entering a loan with interest-only payments

When you enter a standard loan into your finance forecast, Upmetrics will calculate interest and loan payments based on the assumptions you enter. Sometimes, a loan agreement requires you to make only interest payments for a period before you begin repaying the principal. Here's how to represent that type 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. 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 use a loan payment calculator.

Entering a Loan with Interest-Only Payments:

You can create the loan using automatic forecasting or set it up yourself using manual forecasting.

Automatic forecasting:

1

Under the Forecast tab of the Finance Forecasting module, click on the Funding tab.

You will see a setup window where you can describe how the loan is structured.

2

Enter the loan details in plain text. Include information such as the loan amount, loan term, interest rate, how long you will make interest-only payments, and when principal repayments begin.

Click on Draft my funding.

3

Upmetrics will draft the funding source based on the information you entered.

Review the suggested loan and its assumptions. If required, click on the Edit icon to make changes.

4

Once the details look correct, click on Add these sources.

The loan will be added to your forecast, where you can review or update the funding assumptions whenever needed.

TIP: Include the interest-only period, interest rate, loan term, and repayment expectations in your description. Providing these details helps Upmetrics create a more accurate starting point for the loan.

Manual forecasting:

1

If you prefer to set up the loan manually, click on I'd rather set it up myself from the initial funding setup window.

2

In the Set up your funding groups window, enter a funding group name and a source name for the loan.

Click on Create these.

3

Upmetrics will create the funding source. Locate the newly created loan under the Funding tab.

4

Click on Fill it in to open the assumption form.

5

Enter a name for the loan and select the funding type as Other Financing (Borrowed). Toggle the switch if this funding existed before the plan started.

TIP: Moving finance items from one group to another is hassle-free. For a detailed walkthrough, check out our help guide here.

6

Enter the total loan amount and select the date on which you'll receive the funds.

Enter the interest rate as a percentage and select the interest start date. Also indicate whether you expect to repay the financing within 12 months.

Since our example is a 36-month loan, select No, or I'm not sure, and click on Save.

NOTE: A loan you'll repay within 12 months is considered short-term debt in your financial statements. A loan you'll repay in more than 12 months is considered long-term debt. Click here for more.

7

Amount Received: Enter the amount of money you'll receive and when you'll receive it. You can enter a single amount in one period or amounts across multiple periods, depending on how your loan is structured.

8

Amount Repaid: Enter the payments you'll make against the loan balance in the applicable periods.

For the interest-only period, enter only the interest payments. After that period ends, enter the interest-plus-principal payments according to your repayment schedule.

The example below shows interest-only payments during the first six months, followed by interest-plus-principal payments in the remaining months.

NOTE: If you aren't sure of your payment amounts, you may want to consult your lender or use a loan payment calculator.

9

Your updates to the forecast are saved automatically. Once you've finished entering the payment schedule, close the overlay.

Access the Funding report to review your configured debts, including both long-term and short-term liabilities listed in the finance section.