How to keep track of your business loans

Keep an eye on who and what you owe

This is available on the Growing Business or Established Entrepreneur plans

Running your business day-to-day can take up a lot of your time, we get it, and keeping track of all your business expenses can be quite intimidating and time-consuming. But tracking your business spend is so important as it helps you see exactly how your business is doing and how long you have to pay back what you have borrowed. As much as we love to track how much money is flowing into our business, we always need to be aware of what is flowing out, now and in the future.

What are business loans?

If your business borrows money, from a bank, lender or maybe even an investor, that has to be paid back over time with interest, you have loans. You may need these loans to help grow your business, cover costs when you are short on cash or help you get the equipment or inventory you need.

Types of loans?

When you borrow money for your business, it’s important to know what impact that has on your books and what it all means. There are two main types of loans your business may have. Let's unpack them...

1. Short-term loans

These are smaller loans that your business has that will be paid off in a shorter period of time, within 12 months or less to be precise.

Examples of these can be:

  • Credit cards: A credit limit is set and your business can tap into the line of credit as needed and pay it back in monthly instalments
  • Small cash loans: Borrowing a small amount of money that you can pay back within a year
  • Small asset financing: This is when you either borrow money to buy assets you need for your business or pay off the assets with financing from the company you are buying the assets from. These assets can be anything from office furniture to tools and equipment for your business

2. Long-term loans

These loans come with much longer repayment terms, which can be anywhere from 2 to 25 years. These bad boys are going to be around for a looooooong time.

Examples of these can be:

  • Bigger asset financing: This is when you take a loan out for assets like cars, computers, more expensive equipment etc
  • Property loans: If you are buying office space, land or any other property on finance
  • Bigger cash loans: These are larger sums of money you borrow that are going to take you more than a year to pay back

How to track your loans and credit in stub

If your business has a loan, whether it be a credit card, a sum of money or financing an asset, you need to add that to your books to keep a record of how much you have paid off and how much you still owe.

In stub, you can add your loans super easily and here how...

1. Add a loan account

  • Head on over to the "Accounts" section in stub and "Add a loan". Give it a name like Director loan or Scooter loan.
  • Add your loan details and the amount (balance) you still owe towards that loan
  • Select if it is a short-term (you will be able to pay it off within 12 months)

2. Record your loan repayments

  • When you make any repayments towards a loan, add the “Loan repayment” as an expense and select the loan it applies to.

3. Record the loan Interest

  • Record any interest you pay on a loan as an "Interest Capitalised" expense and select the loan it applies to.

Make sure you set up separate loan accounts if you have multiple loans to track each one individually. We will do all the heavy lifting in the background and add your loans as a liability on your balance sheet for you.

A few terms you may hear when it comes to loans

Interest rates: the amount lenders charge you to borrow money from them. It is usually a percentage of the amount you want to borrow. So for example, if you borrow R3000 and the lender wants to charge you interest of 10%. It means that you will have to pay interest of R3000*10% = R300 on top of your loan repayment.

Repayment terms: terms set by the lender so you can repay them what you borrowed. These terms are normally monthly payments made to the lender until the loan is paid off. For example, you have borrowed R3000 from Tom and Tom wants you to pay him back his R3000 by paying him R300 (plus interest) every month for the next 10 months.