How to Set Up QuickBooks Loan Manager?

QuickBooks Loan Manager establishes loans in QuickBooks depending on the info given on the Long-term Liability & Other Current Liability accounts. The Loan manager enables you to track both Principal and interest without glancing over the amortization tables to evaluate the amounts. Subsequently, these amounts will be entered manually using the journal entries.

QuickBooks Loan Manager establishes ‘Amortization schedules’ depending on the following input:

• Loan A/C chosen from COA
• The Loan Amount
• Origination date
• First Payment date
• The Payment amount
• The Payment issue
• Escrow Payment Amount
• Escrow Payment account from the Chart of Account
• Interest Rate
• The Compounding Period.
• Payment A/C chosen from COA
• The interest expense account is chosen from COA
• Fees or Charges account chosen from COA.

How to Set Up a Loan in QuickBooks?

1. First of all, you have to choose Banking, Loan Manager from the menu.
2. Now, click on Add a Loan and fill in all the required details.
3. From the Account Name drop-down list, choose long-term liability account for the loan.
4. After that, from the Lender drop-down list, choose the Payee.
5. Fill up the loan Origination Date.
6. Next, from the Terms list, you have to choose Weeks, Months, or Years and Click on Next.
7. Choose a Payment Method and fill in the Interest rate.
8. After that, choose a Compounding Period.
9. From the Payment Account list, you have to select a bank account.
10. Now, select the Interest Expense Account. Click on Finish.

How to Enter a Loan or Record a Loan in QuickBooks?

Step 1: Establish a Business Loan

1. First of all, choose the Gear icon.
2. Now, select Chart of Accountants from the Company list.
3. Click on New and change the Account Type to Other Current Liabilities or Long-Term Liabilities basis on your loan type.
4. Now, go to Detail Type and change it to Loan Payable.
5.  Enter the name of the account and then click on Save and Close.

Step 2: Enter an Opening Balance

1. Firstly, select the Plus icon (+) and then choose Bank Deposit from the Other list.
2. Now, go to the drop-down list and choose the account where you want to deposit the loan funds.
3. You have to enter the deposit date.
4. Under the Account column, you need to enter the loan payable account created along with the amount.
5. Finally, click on Save and Close.

Step 3: Record a Loan Payment

1. The first step is to choose the Plus icon (+).
2. Select Check/Check from the Vendors list.
3. You need to add a check number if you send an original check.
4. In case, you do a direct withdrawal of EFT, enter Debit or EF in the Check/Check # box.
5. After that, you have to enter the following info in Account Details:
   • First Line: Liability account for the loan and the amount of payment
   • Second Line: Expense account for the interest and the amount
   • Succeeding Lines: Any additional fees along with the appropriate accounts.
6. Finally, choose Save and Close.

How to prepare Loan tracking in QuickBooks Loan Manager?

Before starting to use the Loan Manager in QuickBooks, it is important to set up the below a/c and vendor in QB Desktop.

• Firstly, if no existing vendor has granted a loan, then create a vendor here for the Bank/ Financial institution that is issuing it.
• Next is to record the ‘initial loan’ amount as Opening balance or as a Transaction. Put in the Loan Origination date. In case the payments are already made against the loan, here you fill in these Checks, journal entries or bills.
• Now establish an account similar to an Expense Account to store Interest Payments & Fees, if there was none previously.
• Now make an ‘Escrow Account’ if required.

You May Also Read: A Guide to QuickBooks Closing Entries 

What is Escrow Amount?

The Escrow is a particular part of a loan that is kept in an account by a third-party until all the conditions of the loan are fulfilled. The Escrow account is similar to QuickBooks Asset Account that monitors the Escrow portion of the loan payment. The account is primarily used to pay taxes and insurance.

This is how you set-up an Escrow Account:

• First, go to ‘Lists’ menu, and choose COA (Chart of Accounts)
• Click ‘Account’ option and select ‘’
• Now choose ‘Other account type’ and then select ‘Other current asset’ and press Continue.
• Now fill in the name of the account in the ‘Account name’ section
• When at the ‘Description field,’ now you enter a short note or explanation related to the account (this is optional)
• Choose Save and Close.

How do we track Loans & Repayments via QuickBooks Loan Manager?

• Go to the Banking menu and press ‘Loan ’
• Choose ‘Add Loan’
• Next, Enter a/c info of the loan and choose Next

1. 1. Account name – here put the Loan account previously made
   2. Lender – The vendor who will get payments
   3. Origination date – Date from which the Loan begins or originates
   4. Original amount – The full Initial amount of the Loan
   5. Term – The total time it will take to repay the loan in a specified period such as weeks, months or the years.

• Enter payment Info of loan and press Next

1. 1. Choose the ‘Due Date of Next ’
   2. Payment Amount – The amount to be paid in each specified period
   3. The Next Payment number – It is applicable only if the previous payments are already made.
   4. Escrow Payment – the Escrow amount
   5. Escrow Payment a/c – the Escrow account
   6. Choose ‘Alert me ten days before the payment due date (optional)

• Now enter Interest info of the Loan and press Finish

1. 1. The interest rate- Fill in the Interest rate of the loan. For example, if the interest rate is 5 % then enter 5. Do not put 5% or 0.05.
   2. The compounding period- fill in the period here as per the details specified in the Loan documentation.
   3. Payment Account- Here put in the Bank account that you will use to pay off the loan.
   4. Interest Expense A/c- this account tracks the interest.
   5. Fees/charges expense a/c- It will track the fees/costs of the loan.

• Lastly, review the Loan Info. To do this -Choose ‘Edit Loan Details’ if required. The Summary tab at the bottom section of the Loan Manager shows the Loan details.

The Scenarios Tool

The ‘What if scenario tool’ is a tool to see the effects of other Payment amounts, Repayment time period, etc. Look at the below steps to use it

• Choose ‘What if scenarios’ button
• Now from the ‘Choose a scenario’ drop-down, you can select either of the two ‘How much to pay with a new loan’? or ‘evaluate the two new loans’
• In the ‘Choose a loan’ drop-down select a loan option to work with
• Now fill in the Loan criteria, and press Calculate to reflect the results
• Click on ‘print’ to print results
• Choose OK to shut down/ close once finished.

That’s how you set up QuickBooks Loan Manager and utilize it after that. Once set-up properly, it keeps a good record of the credit amounts and the loans you are taken. If you face any difficulty or issues in performing the above-provided steps, then you can speak to a QuickBooks Expert at QuickBooks ProAdvisor Support Number.

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