Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

Loan repayments, what portion principal vs interest?

One of my start-up investments has an outstanding loan to me, with an open-ended payback period. For each payment that I receive, what portion should be considered as interest, and what portion as principal?

4 Replies

Jon Lunsford
0
0
Jon Lunsford Advisor
Advisor at Centerpost Holdings
It depends on what you mean by open-ended. It sounds like all interest, but it depends on whether there are any fixed repayment obligations. You may have some choices.
Neil Gordon
0
0
Neil Gordon Advisor
Board Member, Corporate Finance Advisor and Strategy Consultant
Is there a loan document? Offhand, it's generally interest first, then principal. (I don't think I've ever seen a loan document that provided for principal to be paid before accrued interest had been paid in full.)
Robert Mendelson
0
0
Robert Mendelson Entrepreneur
Time For A New Challenge at Seeking New Opportunity
There will be a document, trying to finalize details like this first. Robert Mendelson
Kelly (Curtis R.) Lefkowitz
0
0
CEO at Strat/Assist, Conditioning Companies for Capital & Growth
That would depend on the loan document and the reason you want to know what portion is interest and what is principal. Unless there is a specific term in the loan document that says payments will be applied first to principal and then to interest or according the the attached amortization schedule, you can safely assume, in the most conservative case that interest is being paid first. Apply the entire payment to accrued interest (and in the cases of cumulative accrued interest, to interest on the unpaid interest) and any excess amount is applied to principal.
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?