How to Write a Business Plan

116 | HOW TO WRITE A BUSINESS PLAN

But, let’s say that you don’t know how
much money you’ll borrow at this time.
After all, one of the main reasons for
doing a business plan is to decide how
much money you’ll need to fi nance your
business. In that case you have three
choices:
• You can complete the Profi t and
Loss Forecast in this chapter, and
the Cash Flow Forecast in the next
chapter, making your best guess
about how much you’ll borrow and
what your payments will be.
• You can complete the forecasts

without showing any loans or
payments. Then use the results to
decide how much money you’ll
borrow and revise the forecasts to
include loan payments.
• You can complete both forecasts

without showing any loans at all.
Then you can include a discussion

about how much money you’ll

need to borrow and the cash fl ow

available to make repayments. (See

your Plan Summary discussion in

Chapter 9.)

There are loan progress charts

and computer programs that show

approximately how much of any

payment is interest and how much is

principal.

CD-ROM

Nolo, the publisher of this book,

provides a calculator that will create a chart

similar to the one shown below. You can

access it at http://www.nolo.com/legal-calculators.

Enter the information in the form and the

program will calculate interest payments over

the loan period.

Loan interest Calculation Chart

A B C D E F

Month

Balance

(from column

F above)

Monthly

payment

interest paid

(B × % ÷ 12)

Principal Paid

(C − D)

New balance

(B − E)

Starting amount: $ 50,000.00

June 20xx $ 50,000.00 $ 1,660.80 $ 500.00 $ 1,160.80 $ 48,839.20

July 20xx 48,839.20 1,660.80 488.39 1,172.41 47,666.79

Aug 20xx 47,666.79 1,660.80 476.67 1,184.13 46,482.66