How to Manage SBA Loan Payments in QuickBooks

Learn the step-by-step process of handling SBA loan payments in QuickBooks, including splitting payments for principal and interest.

10 Apr 2025 By Tim Moody

In this guide, we'll learn how to manage SBA loan payments in QuickBooks by splitting them into two separate electronic funds transfers (EFTs) for accounting purposes. Although the actual payment is automated and deducted as a single transaction from your checking account, it's important to record the principal and interest separately in QuickBooks. This method helps maintain clear internal accounting distinctions, such as allocating the principal to the capital improvement fund. We'll walk through the steps to ensure accurate financial records and streamline your bookkeeping process.

Let's get started

Here's a quick demonstration on handling SBA loan payments. These payments are automated and deducted from our checking account monthly, so we don't need to worry about them. However, we must account for them in QuickBooks. Steve has determined a new method for managing this.

I will provide a link or post the images in the guide for you. Now, let's walk through how to do it.

Step #1: Top check = interest (general operating fund)Bottom check = principle (capital improvement fund) — Top check = interest (general operating fund)
Bottom check = principle (capital improvement fund)

The SBA loans are recorded in QuickBooks. The most recent entry is dated April 9th.

Step #2: Double-click here — Double-click here

Below, we have two lines. One is for interest, and the other is for principal.

Now, we will pay these via two separate EFTs, even though only one occurs in real life.

EFT stands for electronic funds transfer.

This means we pay them automatically once a month with one payment for the full bill amount. However, in QuickBooks, we'll split it into two payments because the principal should be paid from the capital improvement fund. This is an internal accounting distinction, not a real-world account.

You can refer back to see how I've done it here. There's a loan dated March 9th, and two payments dated March 11th, representing principal and interest.

Step #4: Click on "03/09/2025" — Click on "03/09/2025"

I'm going to select "New Transactions" and then "Pay Bills."

Step #5: Click on "New Transactions" — Click on "New Transactions"

Step #6: Click on "Pay Bills" — Click on "Pay Bills"

Scroll down, find your SBA bill, and click the box to the left of it.

In this case, I'll leave it as today's date since it's close. It's the 10th, and I prefer it to be near the bill date, which is the 9th.

On the far right, everything shows zero except for the one we clicked on, which shows $1,022.00 - this is the "amount to pay" column.

Step #8: Click on "1,022.00" — Click on "1,022.00"

When you select a checkbox on the left, it automatically assumes you'll pay the full bill. However, you can specify a lower amount on the right. For example, I'll type 161.03.

I will click "Pay Selected Bills."

Step #10: Click on "Pay Selected" — Click on "Pay Selected"

When the next screen appears, I will select "Pay More Bills."

Step #11: Click on "Pay More Bills" — Click on "Pay More Bills"

I'll scroll back down to find the SBA bill again and select it on the left, just like before. It will automatically show $860.97, which is the balance after the first payment. In other words, only the principal remains.

Step #12: Click here (a software glitch caused it to not show the text on that line, lol - but I'm clicking the checkbox for the SBA bill) — Click here (a software glitch caused it to not show the text on that line, lol - but I'm clicking the checkbox for the SBA bill)

Step #13: Look here to verify the amount is defaulting correctly - it is! :) — Look here to verify the amount is defaulting correctly - it is! :)

Next, we'll change the account. Quick note - you can do this immediately before even closing the Pay Bills window and I'll show you where you would do it in the image below, but I usually avoid doing this in order to prevent it from defaulting to capital improvement next time.

Step #14: Per the info box above - you can change the bank account right here, but I don't like doing it this way. — Per the info box above - you can change the bank account right here, but I don't like doing it this way.

I usually click "pay selected bills" again. When the prompt appears, I click "done."

Step #15: Click on "Pay Selected Bills" — Click on "Pay Selected Bills"

Step #16: Click on "Done" — Click on "Done"

Looking at the SBA vendor account, I see two checks from April 10th paying the SBA bill. They don't have numbers, so I need to assign a number to each one.

Step #18: I'll start with this one. Double-click here — I'll start with this one. Double-click here

This involves paying the principal. First, change the bank account for this transaction.

It should be funded from the capital improvement fund.

Step #20: Click on "capital improvement fund" — Click on "capital improvement fund"

A pop-up will appear saying the account has changed.

I'll actually click "Do not display this message in the future" so you won't have to see it again, as I don't find it very useful. Usually, I find these pop ups worth keeping around, but this is an exception.

Step #21: Click on "Do not display" — Click on "Do not display"

Great - now that won't happen to you. Next, we need to uncheck "Print Later."

Step #22: Click on "F ✓" — Click on "F ✓"

Once you've done that, this box becomes editable.

Delete the automatically assigned number and type "EFT." Save and close when finished.

Step #24: Click on "Save & Close" — Click on "Save & Close"

It will warn you about some making the change; just click yes.

Step #25: Click on "Yes" — Click on "Yes"

I'll pull up the other check.

Step #26: Double-click here — Double-click here

This interest should come from the general operating fund. There's no need to change the bank account for this one, since it defaults to the general fund. I will uncheck "print later," enter EFT as the check number, and then save and close.

Step #27: Click on "✓ Print Later" — Click on "✓ Print Later"

Type "EFT"

Step #30: Click on "Save & Close" — Click on "Save & Close"

Step #31: Click on "Yes" — Click on "Yes"

Now, if you look at the account, you will see the two payments.

Both indicate that the number was EFT. On this screen, you can also see which one is for capital improvements and which one is for general.

Step #33: Click on "Adirondack Bank - Checking capital improvement fund" — Click on "Adirondack Bank - Checking capital improvement fund"

That's the main point (splitting the payment between gen fund and capital), so make sure it saved correctly.