How to enter the deferred interest accrued from the EIDL loan into quickbooks?

Hello, Bbanda.

I'll share some insights with you about the deferral interest.

For deferral interest, you may enter bills for the amount payable to the lender. If you're on cash basis accounting method, you won't deduct the interest until you pay it, but if accrual, the accrued interest billed is a current expense. 

Before doing so, I recommend consulting an accountant for other options and ensuring your books are accurate and all transactions are accounted for correctly. 

In creating a bill, you can follow these steps:

1. Go to the Vendors > Enter Bills.
2. Select a vendor from the drop-down, then fill out the other required fields
3. Choose the type of bill you want to record: Note: For more details on how to record a bill against inventory, check our guide for Windows or Mac.
   • Expenses - Record a bill for expenses incurred by the business such as phone service, rent, and utilities.
   • Items - Record a bill for anything that your company buys, sells, or resells in the course of business such as products, shipping and handling charges, and discounts.
4. Click Save.

Also, I've added an article for additional reference about setting up accounts for the loan and manually tracking them in QuickBooks Desktop: Manually track loans in QuickBooks Desktop.

I'll be right here if you have any additional questions. Have a good one @Bbanda!

This does not answer this question at all.

I have watched many videos about how to enter accrued interest in QB. I can create the JE, but when I reconcile the loan account, I have to enter the interest expense again.  this doubles interest expense. 

We are running desktop.

Any suggestions?

Thanks for joining the thread, redridinghood.

I'll walk you through the steps of recording accrued interest in QuickBooks Desktop.

Let's make sure the expense account is properly set up and then use the Write check feature to record the payment for the principal amount as a deduction to the liability account and the interest payment as a company expense. I'll show you the step-by-step process.

Set up an expense account:

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click anywhere, then Click New.
3. Choose Expense, then Continue.
4. Enter the account name for the interest payments or charges.
5. Hit Save & Close.

These are steps to record loan payments:

1. Go to the Banking menu, then select Write Checks.
2. Click the Bank Account you want to use to pay the loan.
3. Verify the Check NO. and Date.
4. In the Pay to the Order of field, choose the name of the bank.
5. In the Expenses tab:
   1. On the first line, select the liability account. Then enter the payment for the principal amount.
   2. On the second line, select the interest expense account. Then enter the payment for the loan interest.
6. Once done, hit Save & Close.

For your reference, you can read this article for more insights: Manually track loans in QuickBooks Desktop.

After you've recorded the loan and interest payment, you don't have to enter the interest expense again during reconciliation. This prevents your interest expense account from doubling.

If the issue persists, I recommend running the Verify and Rebuild data to ensure your company is free from any data issues. 

In addition, I've included this resource to help you if you run into any problems during the reconciliation process: Fix issues when you're reconciling in QuickBooks Desktop.

You're always welcome to post again if you need further assistance with recording the accrued interest or reconciliation. We're available to help you at any time.

That is not the answer to my question.  This only covers the expense for CASH accounting, not the accrual interest payable for ACCRUAL accounting. 

Hi there, redridinghood.

I appreciate you for coming back to the thread and adding some clarification about your concern. With this, I'll ensure you'll be routed to the right person to assist you further on how to record accrued interest so your data stays accurate.

In accounting, accrued interests are generally computed and recorded at the end of a specific accounting period as adjusting journal entries used in accrual-based accounting. With this, it'll still be best to consult an accountant to get advice on how to manage and enter accrued interest in QuickBooks.

You're always welcome to post again if you need further assistance with any QuickBooks concerns. I'm always here to help you. Have a great day!

I am an accountant. I understand what these accounts are for.  

@redridinghood  RE: That is not the answer to my question. This only covers the expense for CASH accounting, not the accrual interest payable for ACCRUAL accounting. 

To enter interest in a loan account (a liability account), open the register and enter the interest there, as an increase to the account balance. That's all that you need to do.

RE: I have watched many videos about how to enter accrued interest in QB. I can create the JE, but when I reconcile the loan account, I have to enter the interest expense again. this doubles interest expense. 

You don't need to enter the interest again when reconciling, and should not. There's no reason to if you've actually recorded it already. That field in reconcile is just QuickBooks trying to give you a convenient way to add it if it's new to you - not already entered in the account register.  (The same is true for interest expense for a credit card account or interest income / fees for a bank account during reconcile. None of those fields need to be used if the amounts are already recorded in the target account's register.)

I too find it difficult when responses include the basics and do not directly answer the question! 

My clients EIDL loan is coming due after 2021 deferment. "Kudo's to the government for accruing all that daily interest"

The loan you have created as a long term liability. The principle for these loans does not change.

-If your client is cash basis the deferred interest is taken when it is paid. This leaves you with a daily interest "bill" to EIDL / SBA / Whomever "Loan Interest" because the interest does not increase the principle. 

-Create a vendor for the accruing interest payable, in my case "SBA Loan Interest". However often you prefer, bill the increase of interest with a memorized transaction (monthly, annually or if you are Type A - daily). My clients interest is accrued daily @ 38.75. A memorized annual bill of 14143.75 is sufficient to the point that he begins to off the principle AND interest. Then I will adjust the frequency of my memorized bill accordingly.

-Most important is the cash basis client is deducting interest expense PAID on the annual taxes. 

Accrual Basis can be expensed as the interest "bill" is acquired (daily). and that memorized transaction should then be changed to reflect that increased amount owed to keep the balance sheet accurate with the increased interest liability.

Hope this helps anyone with clients starting to pay back these deferred loans.

Keep it Simple!

@Lobrienea 

"Since it's cash basis do I just split the transaction to take down the principal and interest and not worry about the accrued interest until its actually paid?"

Yes, you got it.  Cash basis accounting does not have accrued interest - that's only for accrual basis.  If you create an entry to Accrued Interest Payable, the offset to that is Interest Expense.  If you do that, then you book the interest expense before the payment is made which is incorrect for cash basis accounting.  Just create either an Expense or Check transaction in QBO (no journal entry needed) when you make a payment on the loan.  Assign the principal portion of the payment to your Loan Payable liability account and the interest portion to Interest Expense.  That properly books the reduction in the loan payable principle as well as the interest expense when the payment is made.