Debt

Track loans with automatic amortization schedules and interest calculations.

The Debt building block tracks loans and calculates amortization schedules, interest expense, and principal balances. Payments flow through to your financial statements.

Video Tutorial

Debt Tutorial

Debt Overview

The Debt building block shows all your debt instruments — the loan name, principal balance, interest rate, and term length. Profitual provides flexible support for different loan structures, and automatically calculates repayment schedules.

Creating a Debt

  1. Navigate to Building Blocks → Debt in the sidebar
  2. Click + Add New Debt
  3. Fill in the form:
Name: Equipment Loan
Principal Amount: $100,000
Interest Rate: 8%
Start Date: January 2024
End Date: January 2029
  1. Click “Save”
  2. Profitual calculates the full repayment schedule automatically

Loan Details and Payment Table

Click any loan to see its details. Here you will see the principal amount, interest rate, term, and payment structure. Profitual calculates the amortization schedule automatically.

The payment table is fully editable. Need to forecast skipped payments? Or change payment dates? Just update it in this table and Profitual will update your financial statements accordingly.

Loan Rules (Advanced Settings)

Loan Rules let you model custom payment terms like deferred payments or reduced payment periods. This is useful when your lender offers special terms at the start of a loan or when you need to forecast payment modifications.

Adding a Loan Rule

  1. Expand the loan details
  2. Click Advanced Settings
  3. Click “Add New Rule”
  4. Select the rule type and configure it
  5. Save to see the updated payment schedule

Rule Types

Rule Type What It Does Configuration
Reduced Payment Multiplies your normal payment by a percentage Set the percentage (0-100%) and whether it applies to Principal, Interest, or Both
Fixed Payment Sets an exact dollar amount for each payment Set the payment amount and the Principal/Interest split

Both rule types require you to specify a duration (number of months) for how long the rule applies.

Reduced Payment Rule

The Reduced Payment rule multiplies your scheduled payment components by a percentage you specify.

Options:

  • Principal Only: Reduce only the principal portion (interest paid normally)
  • Interest Only: Reduce only the interest portion (principal paid normally)
  • Both: Reduce the entire payment by the percentage

Example: A 6-month grace period with 0% on both principal and interest means no payments for 6 months.

Example: A 12-month period at 50% on principal only means you pay full interest but half the normal principal amount.

When to use:

  • Modeling a grace period at the start of a loan (set to 0%)
  • Forecasting temporarily reduced payments during a slow season
  • Simulating interest-only periods (set principal to 0%)

Fixed Payment Rule

The Fixed Payment rule lets you specify an exact dollar amount for each payment during the period, along with how that payment splits between principal and interest.

Example: Set a fixed payment of $500/month with a 50/50 split — each month pays $250 toward principal and $250 toward interest.

Example: Set a fixed payment of $1,000/month with 100% to interest — useful for modeling interest-only periods with a specific payment amount.

When to use:

  • Your lender has negotiated a specific payment amount for an introductory period
  • You want to model exact cash outflows for budgeting purposes
  • Simulating a payment plan with known fixed amounts
Automatic Recalculation
When you add a loan rule, Profitual automatically recalculates the remaining payments after the rule period ends. This ensures your loan is still fully paid off by the original end date — the remaining payments will adjust up or down as needed.

Understanding Loan Payments

Monthly payments include both principal and interest:

Loan: $100,000 at 8% for 5 years
Monthly payment: $2,028

Payment breakdown (Month 1):
- Interest: $667 (goes to P&L)
- Principal: $1,361 (reduces liability)
Amortization
Early payments are mostly interest. As you pay down principal, more of each payment goes toward the balance.

Impact on Financial Statements

Income Statement

Interest on Debt appears in your EBITDA table as a financing cost.

Balance Sheet

The loan appears under Liabilities — split between:

  • Short-Term Debt for amounts due within a year
  • Long-Term Debt for the remaining balance

The balances update automatically as you make payments month-to-month.

Cash Flow

  • Debt show as financing inflow

Debt Types Supported

Type Description
Term Loans Fixed principal with scheduled repayment
Venture Debt Common for startups, often with warrants
Lines of Credit Revolving credit facilities
Interest-Only Principal repaid at maturity

When to Use Debt

Good uses of debt:

  • Purchasing revenue-generating assets
  • Bridging short-term cash gaps
  • Financing growth with predictable returns

Caution areas:

  • Funding operating losses
  • Uncertain revenue situations
  • High-interest short-term borrowing