Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
Any financing you have must also be accounted for in the financial statements.
You’ll need to set up a tab in your spreadsheet to capture the details of a loan, or other types of financing such as accounts receivable financing.
This includes the terms of the loan, the principal, and the interest to be paid.
Include in your profit and loss statement the payments of the loan under operating expenses.
For revenue-based funding, set the payback calculation off of the monthly revenue.
For line of credit financing, calculate the amount needed from the profit and loss row and add that into your monthly payments.
Equity investments will go into the cap table and will not show up on the profit and loss statement.
It’s not unusual to have several forms of short-term debt financing and it’s important to review each to see which one fits your business needs.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.