Payoff Business LOC with personal funds

The personal funds are an investment into the business, then they are spent to pay off the loan.  There is no expense all you are doing is paying back a debt.

I do this kind of thing as a two step process

deposit the funds to a cash bank account and use owner equity or owner equity investment as the source account for the deposit

use the same cash bank account and pay off the loan, using the loan account as the expense (reason) for the payment

Thanks Rustler.  My mother in-law paid directly (not ideal); and just trying to figure out what options we have.  Sounds like your suggestion is to just leave it as owner's equity (the business is closing and no cash available to reimburse...)?

It would have been better if your MIL has paid you, and you paid the loan, but it is what it is.