Are Business Loan Payments an Expense?
Not exactly. Business loan payments are not considered an operating expense. Instead, they are split into two parts:
Principal Repayment – This is the amount you borrowed and are paying back. It is not considered an expense because it reduces your loan balance, not your profit.
Interest Payment – This is considered an expense because it is the cost of borrowing money. Interest payments show up on your income statement and reduce taxable income.
Understanding this distinction is important for managing cash flow and financial planning. If you are exploring financing options or need funding for your business, we can help.
Learn more about our financing services: https://www.lajuanawhitmore.com/financing-services
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