Business Plan Pro tip: Handling loans

If your business plan includes receiving loans, you will need to enter the loan amounts in the Start-up Funding or Past Performance table (for loans received before the plan’s starting date), or in the Cash Flow table (for loans received after the plan’s starting date).

You will also need to enter the planned repayment amounts in the Cash Flow table, and projected Current and Long-term interest rates in the General Assumptions table. The Profit and Loss table will automatically calculate the tax-deductible interest on the loans from these numbers.

About current vs. long-term loans

While the distinction between current and long-term assets has to do with depreciation, standard accounting makes an arbitrary division between current and long-term liabilities. The idea behind this division is about establishing a difference on how long such liabilities last. The division between long-term and current liabilities might be three, five, or ten years.

Each company makes its own decision, usually in agreement with financial management and accountants. You can make that decision yourself or ask an accountant. If you are just starting a new business, and have no idea, then make the division five years: liabilities that last longer than five years are long term.

About interest rates

The General Assumptions table contains default interest rates for your loans – simply type over the existing number for Current or Long-term Interest rate to change this to your projected interest rate.

You do not have to include the General Assumptions table in the printed document. The financials need these numbers, but your readers might not. Although interest rate and tax rate assumptions are standard, not every reader relates to them in detail. If you want to include this table in your printed plan: 

  1. Open your plan Outline
  2. Click on the Important Assumptions topic (in the Financials section)
  3. Click Table on the Insert menu
  4. Choose the General Assumptions table from the existing tables list
  5. Click OK

You can search your Business Plan Pro Help on “loans” or any other term related to this kind of funding to find much more information.

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