Lending Business Financial Model

Overview:

This financial model is designed for a lending company, offering a comprehensive framework to forecast four different types of loans, along with the associated revenues and expenses. The model covers critical financial aspects, including loan assumptions, financing strategies, and detailed financial projections. It provides monthly projections for 5 years, making it an essential tool for financial planning and analysis.

Key Features:

1. Index Tab: The Index tab provides a quick navigation tool with hyperlinks to different tabs and cells. It also includes a DISCLAIMER section on the usage of the financial model and liability, helping users understand the limitations and responsibilities associated with the model.
2. Instructions & Description Tab: This tab provides detailed descriptions of each tab within the model, guiding users through the purpose and functionality of each section, ensuring that the model is easy to navigate and use effectively.
3. Validation Checks: Rows for ‘check cells’ have been incorporated at the end of each tab to flag potential inconsistencies or errors within the model. These checks include ensuring numbers fall within an expected range, monthly figures sum up to the corresponding annual totals, and beginning/end-of-year balances match the first/last month’s figures. When an inconsistency or error is detected, the corresponding check cell will display a ‘1’; otherwise, it will show ‘0’. Column A in each tab is designated for validation checks, showing the total of all check cells in that row. A green tick mark () indicates no discrepancies, while a red cross () alerts to an error. The aggregated result of all check rows in Column A is displayed in cell A4 of each tab. The Index tab consolidates check cells from all sheets, providing a quick overview and aiding in easy identification of discrepancies on any sheet. If the overall model check is satisfactory, cell A3 on each tab will display a double green tick mark (); otherwise, it will show a double red cross ().
4. Loan Assumptions Tab: This tab is central to projecting the performance of four different types of loans. It includes essential inputs such as average loan size, loan duration, number of new loans originated, annual interest rate, early repayment behavior, provision for losses, and various loan-related expenses like insurance, broker commissions, conveyance fees, and underwriting fees. This section ensures a comprehensive understanding of lending operations and risk factors.
5. Other Assumptions: The General Assumptions section requires input of essential business parameters like the business name, starting period, currency, inflation rate, and tax rate, while the Capex Assumptions section focuses on inputs for fixed assets such as computers, furniture, and vehicles. The Financing Assumptions section details the key inputs for funds raised from investors, founders, and customer deposits, and other financing sources critical for understanding how the company finances its operations. The One-time Expenses Assumptions section includes costs like website development, marketing, and legal fees. The S,G&A Expenses section allows for flexible input of sales, marketing, and administrative costs, and the Staffing Assumptions section defines staffing positions, salaries, and hiring timelines. Finally, the Working Capital Assumptions section covers items like current assets, liabilities, and cash reserves.
6. Financial Statements: The model includes tabs for the Profit & Loss Statement, Cash Flow Statement, and Balance Sheet, each providing detailed monthly and annual projections over a 5-year period. These sections offer insights into the company’s profitability, liquidity, and financial position.
7. Loan Projections: This tab provides detailed calculations for each type of loan, including the amount lent, defaults, foreclosures, and maturity payoffs. It also projects revenue streams such as interest income and fees, while accounting for expenses and provisions for loan losses, giving a clear picture of the financial performance of the loan portfolio.
8. Staffing and Expenses: Staffing assumptions, including salaries and payroll benefits, are broken down by department and tracked month-wise. The model also accounts for sales, marketing, and general administrative expenses, allowing for detailed expense management.
9. Graphs and Dashboard: The model features a dashboard for a quick overview of key financial figures and a dedicated graphs tab for visualizing critical performance indicators like interest rate spread, net interest margin, and net interest income. This allows for easy monitoring and strategic decision-making.

Besides year-wise graphs, the above-mentioned graph tabs also contain month-wise graphs where you can input the start and end months. These graphs are tailored for compatibility with Excel for Microsoft 365 and Excel 2021, allowing you to explore month-wise trends.

Technical Specification:

• No VBA or Macros: The model is devoid of any VBA or macro components.
• Circular Reference-Free: The financial model includes circular references, which are necessary to calculate the exact amount of financing required. Users must enable iterative calculations in Excel to ensure accurate results. To enable this, go to File > Options > Formulas, and under Calculation options, check the box for Enable iterative calculation.
• Excel Compatibility: The model is compatible with Microsoft Excel 2010 and later versions, with the following notes:
• Graphs with start and end month dropdowns and thresholds in the Expenses Composition Analysis tab are fully functional only in Excel 2021 and Microsoft 365.
• While most features work seamlessly across versions, some charts may have minor formatting and data label variations in versions earlier than Excel 2021.

Should any challenges arise while navigating or utilizing this financial model, our dedicated support team is readily available. We commit to getting back to you as soon as possible to ensure a seamless experience. For tailored solutions to your specific business requirements, kindly reach out to us with a concise overview of your needs. Your success is our priority, and we look forward to supporting your financial endeavors.