When I connect to a bank loan account, how do I categorize it?

I don't think you can connect to a loan.  I've never heard of anyone doing that.

Hi there, VC bookkeeper.

QuickBooks Online doesn't have the option to connect bank loans. I suggest to manually enter the loan transactions in QBO. Before doing the steps below, I recommend contacting an accountant to help you categorizing the transactions.

Here's how to enter loan transactions:

First, set Liability account to record the loan:

1. Click the Gear icon and select Chart of Accounts.

2. Click the New button.

3. In the Account Type drop down list, select Long Term Liabilities. Take note that if you plan to pay off the loan by the end of the current fiscal year, select Other Current Liability. Otherwise, select Long Term Liabilities.

4. From Detail Type drop down arrow, select Notes Payable.

5. Give the account a relevant name, like "Loan for a car."

6. Enter the full loan amount as a negative amount in the Amount field. Since the future payments to the bank are a liability for your business, the amount should be negative.

7. Click the Save and close button.

One done, you can now record the money you got from the loan. please follow these steps:

1. Select the Plus icon and the choose Journal Entry.

2. On the first line, select the liability account you've created. Then enter the loan amount in the Credits column.

3. On the second line, select the appropriate asset account from the Account drop down. Then enter the same loan amount in the Debits column.

After that, please check this article for additional information and follow step 3 to finish the process: Set up a loan in QuickBooks Online.

Please check this article on how to assign multiple categories to a single transaction: Assign, categorize, edit, and add your downloaded banking transactions.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.

This isn't true unless they removed the functionality at some point.  I currently have a loan account connected in my bank feed.  I have had 2 others in there in the past as well (paid now).  I'm looking at my COA and it shows the current one as connected to the feed and that it is 233 "Long Term Liabilities" account.  That said, I'm here because I just refinanced some debt and am trying to connect a new loan with the same institution I have a past loan with (and had a connected bank feed for) and it isn't allowing it.  So I'm guessing there is either some work-around, or QBO reduced the feature set of the bank feed for some unknown reason.

I'm going to try connecting it as a different account and then re-assigning it once it's pulled in and see if that works.  I suggest the OP do the same if they haven't already found a different solution.

I was able to connect a loan as a credit card for one company and then reclassify it to long term liabilities. However, when I try the same in another company it won't let me change the account category. I get the following error:

This account is being used on a Check, Deposit, Payment or other transaction where an account of type 'Cash' or 'Undeposited Funds' is required. You must locate and change those transactions to use a different Cash account before you can change the Account Type of this account. To find the transactions using an Account, run an Account QuickReport, or use the Account Register.

Thank you for joining the thread, @kevin57.

Since you already created transactions on the credit card that you're connecting, QuickBooks Online (QBO) will not let you edit the account type as a liability. Liability account can't work as a bank account in QBO, thus, you can't create a transaction that has a liability as a bank account.

If you want to modify the account type, you must follow the pop-up notification to locate and change those transactions to a different cash account before changing the account type.

For more information about managing accounts in QBO, read these articles:

• Manage default and special accounts in your chart of accounts
• Create an account on your chart of accounts in QuickBooks Online
• Create subaccounts in your chart of accounts in QuickBooks Online

Post again if you have any other questions. I'm always here to help. Have a good day!

Is this a feature that could be added? Loan account transactions need categorizing only once..... a loan payment is a transfer from a bank account to a loan account. and an interest charge is interest expense.... with a webconnected account and properly set up rules quite a bit of work can be saved. 

Thanks for the feedback, @cscharlesiv.

I'm going to pass this along to the Product Development Team about bringing in a feature to allow categorization with a loan transaction in the Banking Feed of QuickBooks Online, as I can see how this be beneficial by saving time and work. You can visit our Blog to see recent updates to our products, as well as seeing what's coming in the future.

If you have any further questions or concerns, please don't hesitate and reach back out! I'm here to help in any way that I can. Have a beautiful day.

Echo the last comment suggesting that loan/mortgage accounts become part of bank feeds.  Modern loan/mortgage accounts are just like bank accounts nowadays given they have offsets, redraws, and even debit cards so transactions can be processed directly onto a credit facility (like a credit card but not).  So these loans/mortgages are no longer set and forget with an amortization schedule.  That's where modern, contemporary banking is going.  Would be good for QBO to follow.  And would suggest with some priority.

@Ashley H That a business accounting solution platform doesn't provide bank-transaction import functionality for loans in this millenium is simply bonkers. It's not like the development is a heavy lift.

Maybe you think that long-term debt isn't a thing for your target small business market. You might have been right then, but this is now.

You do realize that during the pandemic approximately 4 million new business loans were originated under SBA programs? And that nearly 2 million of them were PPP loans for under $50k? Dontcha think QBO might want to position itself as helping out these small businesses?

If not, you might as well save everyone a bunch of time and post this on your website: "WARNING: QBO can't help you account for your PPP or EIDL -- go somewhere else."

This is a featured that should be added to the bank feed.  The reason that I chose QBO is to reduce in manually entering transactions and see my financial portfolio in one place.  If loans are not a feed then it is not really serving it's purpose.  Especially with technology currently.  This should be an automatic feed so that customers can see the current status of their loans and not log in elsewhere.   

Another item of note - usually PPP loans go through the same bank where the company has an account. When I try to connect the checking account to QBO, it won't let me continue until I also connect the loan. But the only option is to create it as a credit card, which it clearly isn't. Please resolve ASAP.

I need to recategorize a "Credit card" account into a long-term liability. This is bonkers that it's not happening automatically for me. And this is a year after the thread on this forum saying the feature would be discussed with product management. Come on! I have this Balance Sheet with a $200K mortgage in "credit cards." That's not accurate. 

Has this been resolved in 2022. If not WHY? I want to see all my actual loans and LOC so I can accurately report on my business.

Thanks for joining this thread, @MJHFAB. Let me provide an update about this matter.

As mentioned by my colleagues above, editing account type as liability isn't possible in QuickBooks Online (QBO). A liability account can't work as a bank account in QBO, thus, you can't make a transaction that has a liability as a bank account.

At times, we roll out enhancements based on our customer's requests. That being said, I suggest sending a recommendation to our product developers. They'll review this idea and might consider updating it in the future.

Here's how:

1. Go to the Gear located at the top.
2. Under Profile, click Feedback.
3. Enter your recommendation and select Submit.
   
   

You can also utilize this link to check the status and keep you in the loop on our progress of your request: Customer Feedback for QuickBooks Online.

I also encourage you to visit this resource that will guide you in managing your accounts in QuickBooks: Set up and add accounts to your chart of accounts.

As always, leave a comment below if you have any other questions about categorizing credit card as a liability account in QuickBooks. I'm here to help always. Take care!

Same thing for me!

Hi there, FBB1.

Thanks for joining us here. Can you tell us more details about your concern? Are also trying to add a loan account? We just want to make sure that we're giving you the right steps or information to sort this out.

Please reply back to us to share more details. We look forward to it. 

What do you do with the bank feed transaction when you receive the funds then? Do you have to create a long-term liability and then exclude the bank feed transaction or do you do both? Does it create a double entry?

When will this be fixed? Need to be able to loan accounts from bank