You can connect a loan account to QuickBooks Online only if your lender offers a feed through the Connect account screen, and many do not. When one does, link it to a liability account, not a bank account. The feed shows each payment as one total, so you still split out the interest by hand.
Does your lender appear when you connect a loan account?
Your lender appears only if it shares data with QuickBooks for that kind of account. Intuit's page on connecting bank and credit card accounts describes linking checking, savings and credit card accounts. It does not promise loans, so whether yours shows up depends on the lender.
To find out, go to Bank transactions, select Link account and search for the lender. After you sign in, the list of accounts tells you the answer:
- The loan is listed. You can connect it like any other account.
- Only your checking or savings is listed. The lender shares deposit accounts but not the loan. Record the loan from its statements instead.
- The lender is not found at all. This is common for equipment finance firms, online lenders and private loans. Use statements.
A loan from a bank where you also keep checking is the most likely to connect, because the bank already has a feed for your other accounts.
Setting up the loan as a liability account before connecting
A loan is money you owe, so it needs a liability account in QuickBooks Online. Intuit's guide to setting up a loan in QuickBooks Online uses a non-current liability for a loan repaid after the current year and a current liability for one repaid within it.
That guide is written for Intuit's international edition. The US edition calls the same types Long Term Liabilities and Other Current Liabilities.
Before connecting, create that account and give it the balance the lender shows on the date your books start. Then, when the connection screen asks which QuickBooks account to use, pick it. Linking a loan to a bank-type account makes the balance count as cash you have, which inflates every balance sheet.
What a loan feed shows for each payment
A loan feed shows what the lender's own system records, which is usually one line per payment for the full amount. The lender knows how much of it went to interest, but the feed rarely carries that split. Some lenders also post a separate line when interest is charged to the balance.
The checking account feed shows the same payment from the other side, as one withdrawal. So one loan payment can appear twice: as money leaving checking and as money arriving at the loan. Both lines describe one event, and only one of them should create an entry. The other is matched or excluded.
Splitting interest out of a downloaded loan payment
The interest in a loan payment is an expense, and only the principal reduces what you owe. Intuit's loan guide records a repayment with two lines: one to the loan's liability account and one to an interest expense account. Take the split from the lender's statement, which lists principal and interest for every payment.
A worked example
The figures below are examples. Your statement gives the real ones.
| Item | Amount |
|---|---|
| Loan balance before the payment | $40,000.00 |
| Payment from checking | $850.00 |
| Interest part, from the lender's statement | $200.00 |
| Principal part | $650.00 |
| Loan balance after the payment | $39,350.00 |
In the checking feed, open the $850.00 withdrawal and split it: $650.00 to the loan liability account and $200.00 to interest expense. The checking account drops by $850.00, the loan drops by $650.00, and $200.00 lands on the profit and loss report.
Now look at the loan feed. If it shows a payment of $850.00 and a separate interest charge of $200.00, the loan account can mirror the lender instead. In that case, do not split the checking withdrawal: record it as an $850.00 transfer to the loan, match the loan feed's payment line to that transfer, and record the interest line as interest expense. The net change to the loan is again $650.00. If it shows only the $850.00 payment with no interest line, adding it would drop the loan by the full $850.00. Exclude it, because the split from checking already recorded the payment correctly.
Once a month, compare the loan account in QuickBooks with the balance on the lender's statement. They should agree to the cent. QuickBooks Online bank balance vs QuickBooks balance explains the two figures on each tile and why they may not match.
When not to connect a loan account at all?
Skip the loan feed when the lender sends only payment totals. The checking feed already shows every payment, and the lender's statement gives the split, so a second feed adds lines to exclude and nothing new. One journal entry or split payment a month, taken from the statement, is simpler and easier to check.
Other cases where the feed adds little:
- A loan near its end. When the loan is paid off, the account has to be zeroed and closed; closing a bank account in QuickBooks Online covers the steps, and fewer connections means fewer to undo.
- A loan with fees or escrow. Mortgages and some equipment loans mix escrow, insurance and fees into one payment, and the feed cannot tell them apart.
- A loan you also track in a lender portal. The portal's statement is the source of truth either way.
Keep each statement PDF. QuickBooks does not store lender statements for you; getting bank statements from QuickBooks Online explains what it keeps and what it does not. A loan statement is not shaped like a bank statement, so turning it into an upload file takes care; converting a PDF to QBO by hand shows what the file has to contain. For the checking account that pays the loan, SimpleBankConvert is being built to turn the statement PDF into a CSV or QBO file you can upload.