What a loan balance roll-forward is
A roll-forward starts with what you owed at the beginning of a period, adds any new borrowing, takes off the principal you repaid, and arrives at what you owe at the end. The ending balance of one period is the beginning balance of the next. Interest does not change the balance on a loan repaid in level instalments, because each repayment first covers that month's interest and only the rest reduces what you owe.
In a cash flow forecast the same three movements become cash lines. Cash received from new borrowing is a financing inflow and principal repaid is a financing outflow. Interest paid is the line that depends on your accounting framework: IAS 7 has generally let businesses show it as an operating or a financing cash flow, and amended IAS 7 in April 2024 on how interest is classified, so check which treatment applies to you with your accountant.
Worked example: £100,000 over five years, forecasting the second year
A business borrowed £100,000 at 8% a year over five years, repaid monthly at £2,027.64. After 12 repayments it has repaid £16,944.01 of the principal, so the beginning balance of the second year is £83,055.99.
Over the next 12 months it repays £18,350.35 of principal and pays £5,981.32 of interest, £24,331.67 of cash in total. The ending balance is £64,705.64, with 36 scheduled repayments left. Check: £83,055.99 less £18,350.35 is £64,705.64.
For the first year of the same loan, set the months repaid before the period to zero. The beginning balance is then the full £100,000.00, the principal repaid is £16,944.01 and the interest paid is £7,387.66.
How the beginning balance is worked out
The calculator takes the original amount, the yearly rate and the term, and finds the level monthly repayment that clears the loan exactly. It then applies each repayment in turn for the months you say have already been repaid. Each month the interest is the balance multiplied by the yearly rate divided by 12, and the rest of the repayment reduces the balance. The balance after those repayments is the beginning balance of your period.
If you only want the balance on a given day, with the principal and interest paid so far, use the loan balance calculator.
New borrowing during the period
If the business draws more cash at the start of the period, it is added to the beginning balance and the repayment is recalculated over the months that are left, so the loan still ends on its original date. After 24 repayments of the same loan the beginning balance is £64,705.64. Drawing a further £25,000 and forecasting six months gives a repayment of £2,811.05 a month, principal repaid of £13,501.34, interest of £3,364.95 and an ending balance of £76,204.29.
In the cash flow forecast that period shows £25,000.00 received from borrowing against £16,866.29 paid to the lender.
Extra repayments and the end of the loan
A voluntary extra repayment reduces the balance faster. With £500 extra every month, starting after six repayments and forecasting 24 months, the principal repaid is £49,696.47, the interest is £10,966.87 and the loan falls from £91,696.85 to £42,000.38 by the end of the period.
A period cannot run past the end of the loan. Forecasting the final 24 months of the example, after 36 repayments, takes the balance from £44,832.21 to £0.00, with £3,831.14 of interest paid.
Other ways to read this question
This page works forward from the original loan terms. If you already know the ending balance and want the beginning, add back the principal repaid and take off any new borrowing, which is the same equation turned round. If you know the repayment and want to find how much was borrowed, work back from the repayment instead, and if you want the whole payment schedule, an amortisation calculator lists every month.
To find how much a repayment would support, use the business loan amount calculator.
What this estimate leaves out
The model uses level monthly repayments, a fixed nominal rate and interest on the balance each month. It does not model daily interest, a variable rate, payment holidays, fees added to the balance, or interest charged on the average of the opening and closing balances, which some forecasting models use instead. Your lender's statement is the record that counts, so compare the beginning balance with it before relying on a forecast.
For the repayments and cost of a short-term loan, see the cash flow loan calculator.
Use the right country page
This page stays in pounds and uses UK terms: cash flow forecast and an interest rate quoted as a yearly nominal rate. The country choices above the inputs open separate local pages. Choosing United States opens the loan beginning balance cash flow calculator, which uses statement of cash flows wording. The inputs reset and amounts are not converted.
Inputs for the loan balance roll-forward calculator
Original loan amount
How much was borrowed when the loan started.
Interest rate
The yearly rate. Interest is charged monthly at one twelfth of it.
Original term
How long the loan was set up to run, in years, up to 30.
Months repaid before the period
Level monthly repayments already made when your period starts. Zero if it starts with the loan.
Months in the period
The length of the period you are rolling forward, such as 12 for a year.
New borrowing at the start of the period
Extra cash drawn on the loan at the start. Repayments are recalculated. Enter zero for none.
Extra repayment each month
A voluntary amount paid on top of the scheduled repayment every month. Enter zero for none.
CALCULATOR QUESTIONS
UK loan balance roll-forward calculator questions
How do you calculate the beginning loan balance?
Apply each repayment already made to the original loan: interest is the balance times the yearly rate divided by 12, and the rest of the repayment reduces the balance. After 12 repayments of a £100,000 loan at 8% over five years the balance is £83,055.99.
What is the formula for a loan balance roll-forward?
Beginning balance plus new borrowing less principal repaid equals ending balance. Interest is shown separately because a level repayment covers it first.
Where does a loan go in a cash flow forecast?
Cash received from borrowing and principal repaid are financing cash flows. Interest paid is shown as an operating or a financing cash flow depending on your accounting framework, so ask your accountant which applies.
Is the ending balance of one period the beginning balance of the next?
Yes. In the example the ending balance of the second year, £64,705.64, is the beginning balance of the third.
What happens if I borrow more during the period?
The new amount is added to the beginning balance and the repayment is recalculated over the months that are left, so the loan still ends on its original date.
Why must the period fit inside the loan term?
The calculator rolls forward scheduled repayments, so it can only forecast the months the loan still has left. Shorten the period or enter fewer repaid months.
What happens when I change country?
The United States option opens the separate loan beginning balance cash flow calculator, in dollars, with statement of cash flows wording. Your inputs are reset rather than converted.