Does receiving loan proceeds count as income?

No, never. It increases both Checking and this liability by the same amount — it is debt, not earnings, even though it arrives as a deposit like income would.

Where does loan interest get recorded?

6750 Interest Expense — the account this chart ships specifically for loan and credit-card interest, split out from the principal that reduces this account.

2700liabilityNormal balance: Creditbusiness

2700 — Loans Payable

An SBA loan, an equipment financing agreement, a draw on a business line of credit — any money borrowed for the business, and still owed, belongs in Loans Payable. It is a liability with a normal credit balance: the loan proceeds increase it, and each payment's principal portion decreases it.

The distinction that trips people up most is principal versus interest. Only the principal portion of a loan payment actually reduces this account — the interest portion is a genuine expense, not a reduction of what you owe, and it belongs in 6750 Interest Expense, the account this chart ships specifically for that purpose. A loan payment that blends both is one entry with three lines: principal against 2700, interest against 6750, and the total against the bank account it left.

When the loan proceeds themselves arrive, they increase Checking and this liability together, in equal amounts — never revenue. It can look like income landing in the bank account, but borrowed money is debt, not earnings, and treating it as revenue would badly overstate how the business is actually doing.

What belongs here

the outstanding principal balance on an SBA loan, term loan, or equipment financing agreement
draws taken against a business line of credit
the principal portion of each loan payment, reducing the balance
the initial loan proceeds received

What does not belong here

interest paid on the loan — a genuine expense, not a reduction of this liability; it belongs in 6750 Interest Expense
the full payment amount if it blends principal and interest — only the principal portion reduces this account
the loan proceeds treated as income — borrowed money is never revenue, no matter how it looks arriving in the bank
a credit card balance — tracked separately in its own account (2100), since it behaves differently than a term loan

Where it shows up

Shows on the balance sheet as the remaining principal owed, not the original loan amount or total interest over its life. This simplified chart does not split a current portion from a long-term portion, which is an acceptable simplification for a small ledger but worth knowing if you need that split for a lender.

Common questions

Does receiving loan proceeds count as income?: No, never. It increases both Checking and this liability by the same amount — it is debt, not earnings, even though it arrives as a deposit like income would.
Where does loan interest get recorded?: 6750 Interest Expense — the account this chart ships specifically for loan and credit-card interest, split out from the principal that reduces this account.