An operating surplus is not necessarily the cash available after borrowing. Loan principal and interest need a payment schedule, while the opening loan receipt must remain separate from business revenue.
Obtain the actual repayment schedule
Record the lender, drawdown conditions, interest terms, fees and dates of each payment. Do not construct a definitive schedule from a promotional rate alone. Any final payment, variable-rate exposure or repayment holiday needs its own treatment.
Reconcile cash and profit views
Place debt payments in the cash model and have an accountant explain the corresponding profit treatment. If an operating forecast already includes interest, adding the entire repayment again to that same profit figure may double-count part of the cost. State which starting measure you use.
Stress-test the payment calendar
Test lower receipts, slower launch and a changed payment where the agreement permits rates to vary. Keep the household budget separate from business debt service. A lender’s willingness to consider an application is not proof that the operation can comfortably fund every obligation.
A worked research example
Illustrative example: cash receipts of 30,000 less operating payments of 25,000 leave 5,000 before debt service. Loan payments of 3,500 reduce that month’s remaining cash to 1,500, before omitted taxes, investment and owner withdrawals.
Evidence to gather
- Request a dated lender repayment schedule
- Separate loan proceeds from sales
- Reconcile interest already in operating figures
- Test cash after repayments under weaker receipts
The worksheet below uses editable example inputs. It does not automatically reproduce the scenario or every calculation rule discussed above.
How long will your cash last?
Frequently asked questions
Is principal repayment an operating expense?
Its accounting treatment differs from a cash outflow. Have an accountant reconcile the two views.
Does finance approval establish affordability?
No. Test the actual business and household cash commitments independently.
Does the site’s runway tool include debt automatically?
Only payments you enter are included. Add the relevant debt payments to your cash-payment assumption.
Sources and scope
References checked 6 November 2026. The questions, examples and diagrams are our editorial research tools; they are not statements that every franchise has the same terms.
- SBA — Manage your business
General operating and finance background; local and contractual requirements still need checking.
- British Business Bank — Leasing and hire purchase
UK asset-finance background; actual ownership and payment terms depend on the agreement.
General editorial information, not personalised legal, tax or financial advice. Confirm local requirements and the actual documents with appropriate advisers. Examples are hypothetical. Contact the editor or suggest a correction.
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