Business Mortgages & Loans

Purpose: This module simulates the Cash Flow and business Gross Income required to pay down debt, business lines of credit, mortgages, and other Liabilities such as an unfunded buy and sell agreement. Most often, principal payments must be made on an after-tax and after-interest basis. The result is eye-opening: a seemingly manageable loan actually requires many multiples of its face value in gross revenue to service.

Total Debt (P+I)

Annual Payment

Total Cash Flow Req'd

Total Gross Revenue Req'd

The Gross-Up Effect: Why Business Debt Is Far More Expensive Than It Appears

A $3,600,000 loan doesn't just cost $4,890,581 in total payments (principal + interest). Because principal must be repaid with after-tax, after-expense dollars, the business must actually generate: $68,436,926 in total gross revenue over the life of the loan just to service this debt. That's 19.0x the original loan amount. At a 10% profit margin and 35% tax rate, only 6.5 cents of every gross revenue dollar goes toward paying down principal.

Liabilities Payoff

Remaining loan balance by year

Total Debt: $4,890,581

Cash Flow Required

Annual net revenue needed to service debt

Total Cash Flow: $7,524,048

Amortization Detail

Show Details

Year	Gross Revenue	Profit Margin	Net Revenue	Income Tax	Net (After Tax)	Interest	Principal	Remaining Balance

Loan & Business Parameters

The Gross-Up Effect: Why Business Debt Is Far More Expensive Than It Appears

Liabilities Payoff

Cash Flow Required

Amortization Detail