How to deal with a loan from a bank or government scheme
This article explains the steps you need to take in FreeAgent if your business has borrowed money from a bank or a government loan scheme.
You can follow these steps if you received a loan from a bank or from the government’s Coronavirus Business Interruption Loan Scheme (CBILS) or Bounce Back Loan Scheme (BBLS). For information on how to deal with a loan from an individual, please see this article instead.
You’ll need to follow the steps below to set up a bank account for the loan and then explain the bank transactions associated with the loan once they have been imported into your FreeAgent account via a bank feed or uploaded from a bank statement.
Please note that you need to have level 6 access or above to your FreeAgent account to explain bank transactions.
1. Create a bank account
First, set up a new bank account in FreeAgent by navigating to the 'Banking' tab at the top of the screen and selecting 'Bank Accounts' from the drop-down menu.
From the 'Bank Accounts Summary' page, select 'New' and choose 'Bank Account' from the drop-down menu.
Call it 'Bank Loan', or something similar that you will recognise. Don't tick either of the 'This is a personal account' or 'Make this my primary account' checkboxes.
The opening balance will normally be £0.00 unless the loan came in before your FreeAgent start date.
Select ‘Create new account’ to complete the process.
2. Explain the bank transactions
Next, you will need to explain the bank transactions associated with the loan that are paid into and out of your business bank account.
Money paid into your business bank account
Once you have received the money and the relevant transaction has been imported into your business bank account in FreeAgent, navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.
Choose the relevant bank account from the list.
Select the transaction that you would like to explain.
Select ‘Transfer from Another Account’ as the transaction ‘Type’ and choose the bank account that you created for the loan from the list of accounts.
Select ‘Explain Transaction’ to complete the process.
A record of the bank transaction being explained will also appear in your Audit Trail report.
Money paid out of your business bank account
When you repay the loan with money from your business bank account, navigate to the relevant bank transaction, select ‘Transfer to Another Account’ as the transaction ‘Type’ and choose the bank account created for the loan from the list of accounts.
Select ‘Explain Transaction’ to complete the process.
A record of the bank transaction being explained will also appear in your Audit Trail report.
Paying interest on the loan
If you pay interest on the loan, you'll need to record the interest payments manually as going out of the bank account you created for the loan in FreeAgent, not your business bank account.
When manually entering the interest payments, select ‘Payment’ as the transaction ‘Type’, then select ‘Interest Payable’ as the transaction ‘Category’ and enter a description.
Select ‘Create and Finish’ at the bottom of the screen to complete the process.
A record of the bank transaction being explained will also appear in your Audit Trail report.
I need help with…
View all categories →Articles in this section
- How to deal with a loan from an individual
- How to match your FreeAgent bank balance to your bank account balance
- How to use the ‘Balance at bank’ feature
- How to enter bank transactions manually
- How to match a manual entry to an imported bank transaction
- How to deal with a loan from a bank or government scheme
- How to manage till takings for shops
- How to deal with cash
- How to search for bank transactions