I've scoured the Internet for guidance on how to account for this, but have come up with nothing so far. I 'm hoping the community can help.
I have a SBA loan serviced through a local bank (this is a traditional SBA loan, not a PPP or any other recent pandemic-related loan type). I've set up a Long Term Liability | Notes Payable account for the loan, in addition to a checking account for the bank. The bank disburses loan proceeds in two ways:
1. As a deposit into the checking account, where I then pay the bill myself, or
2. As an ACH transfer directly to the vendor.
In scenario #1, when the loan proceeds are deposited into my account, I make a journal entry crediting the loan account and debiting the checking account. I then pay the bill using the checking account. Everything works as expected. It's this second situation that I'm struggling to account for. I want to credit the loan account to reflect the disbursement, but a journal entry won't allow me to reflect the proceeds are being applied to a vendor bill/invoice.
I can't be the only SBA loan recipient who's paid vendors directly without the cash flowing through their bank. So how do I account for this? The loan needs to reflect reality and the bill needs to show paid.
Any ideas that don't involve creating a dummy checking account to hold the direct disbursements? Thanks in advance!
