In the prior chapter we looked at Excel formulas and how to construct them. In this chapter we will examine functions, how they differ from formulas, and how to use them in a spreadsheet. The PMT function is one of many built in Excel functions.

Inputs to the function include the loan amount (pv), the interest rate (rate), and the number of loan payments (nper). However, Excel provides an easier way to calculate loan payments using the payment (PMT) function A built in Excel function that calculates loan payments.

The financial formula that calculates loan payments is fairly complex. Determining the payments on a loan is an important part of forecasting costs. Loan payments form part of the fixed costs of a business. Fortunately, there are government agencies at both the federal and state levels that help businesses secure grants and loans. On the other hand, small businesses without a prior track record sometimes have trouble securing a bank loan. However, the danger here is that you are risking not only your family’s money, but also the relationships if the business should go under. Many entrepreneurs will turn to family for a loan. Many businesses need a loan in order to cover startup costs These are fixed costs associated with starting a business.