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How do I plan a loan?

Description This article demonstrates how you can easily plan and project a loan with Forwardly.
Objective At the end of this article, you should be able to effectively create a projection and analyze how a loan would affect your projected cash flow.
Estimated reading time 5-6 minutes

With Forwardly, you can easily plan and project a number of different scenarios, including how a loan may affect your business's cash flow going forward.

How to Plan a Loan

  1. On the Cash Flow page, click on Plan a Scenario. 
  2. Click on Plan a Loan. 
  3. Fill out the loan details:
    • Lender Name. The name of the third party, business, or institution that is extending the loan to you. You can:
      • Pick from an existing contact or vendor; or
      • Enter a new name.
    • Chart of Account. This is the Chart of Account that this loan would fall under. 
    • Loan Amount. You can use the slider to specify the loan value or enter it directly by clicking on the displayed loan value. 
    • Annual Percentage Rate. You can use the slider or enter this value manually by clicking on the displayed rate.
    • Select the rate type:
      • Flat
      • Reducing
    • Number of Installments. You can use the slider or enter this value manually.
    • Additional Charges. Add a value for this field if there are any additional charges associated with this loan, such as an advisor fee.  Otherwise, you can leave it blank. Charges can be added based on:
      • Value. The number you enter here will be taken as a flat monetary value.
      • Percentage. The number you enter here will be taken as the percentage value of the total loan amount.
    • Installment Start Date. The date when the first installment of this loan is expected to be paid. 
    • Installment Frequency. This specifies whether the installments will be paid:
      • Daily
      • Weekly
      • Bi-Weekly
      • Monthly
      • Semi-Monthly 

Example: Planning a Loan

Now, let's actually try planning a loan.

Suppose you are a manufacturing business looking for a small business loan of $350,000. The City Bank has pre-approved your 5-year, fixed-term loan at 12%. In order to assess whether this loan will help or hurt your business's cash flow going forward, insert the following:

Tip: As you make changes, keep an eye on the summary area to see how each option changes the final result. 
    • Lender Name: The City Bank
    • Chart of Account: City Bank Loan
    • Loan Amount: $350,000
    • Annual Percentage Rate: 12% (Reducing: Interest + Principal)
    • Number of Installments: 60 
    • Additional Charges: $1,000 for fully-disclosed advisory fees
    • Installment Start Date: First of the Next Month
    • Installment Frequency: Monthly

 

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