What is Quickbooks Loan Manager and How to Set it Up?

QuickBooks Desktop Loan Manager allows businesses to track unpaid loans and adjust monthly installments if necessary. QuickBooks Loan Manager is an essential tool for any workplace around the globe. How? Let's find the answer.

This divides the total loan amount into principal and interest so that the loan repayment is on time. You can add or remove loans and set up loan payments. You can also see repayment schedules and examine different loan scenarios. It calculates the amortization schedule using the current rate provided by the user so that you don't have a lot of work to do each month.

It creates the record for amortization based on the following input:

• You can choose the loan A/c from the Chart of Accounts.
• The loan amount.
• The date on which the loan was taken.
• The date of the first installment.
• The amount of the first installment.
• Payment is issued.
• The amount of the Escrow Payment.
• You must account for the Escrow payment in COA.
• The interest rate on the loan.
• Compounding period.
• A/c Payment, Interest expense a/c, and Fees or Charges a/c selected from the Chart of Accounts.

How do I set up a loan manager in QuickBooks?

These are the accounts you need to create to set up Loan Manager in QuickBooks.

Liability Account - To keep the loan in the future while selecting an account.

• Open Charts of Accounts by going to the Lists menu.
• Select New from the Account dropdown.
• Click on loan, then choose to continue.
• Complete the Account Name field and click on Enter Open Balance.
• Click on OK, then Save and Close.

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Vendor – To enter the name of the bank or financial institution that is issuing the loan.

• In the Vendors menu, click on Vendors Center and then choose New Vendor...
• Fill out the necessary information and click OK.
• Expense Account – To track the interest payments or fees and charges.
• Go to the Lists menu and open and open Chart of Accounts.
• Click on the Account drop-down and select New.
• Click on Expense and select Continue.
• Name the account for interest payments and fees and charges.
• Click on Save & Close.

Escrow Account – This is a small amount of loan held in escrow until the loan terms have been met. QuickBooks uses this account to track the escrow amount of the loan. It is used to pay insurance and taxes.

• 1. Click the Lists menu and select Charts of Accounts.
• From the Account dropdown, select New.
• Open Other Account Types and then select Other Current Asset.
• Click on Continue and enter the account name.
• Click on Save & Close.

How do I add and track loans using QuickBooks Online Loan Manager?

Before we get into the steps, you should know that if the loan is paid in regular, fixed payments, then the repayments will be the sum of the principal amount and compounded interest for the period. The principal amount will increase and the interest amount will decrease as you progress toward the end. The QuickBooks Online Loan Manager creates an amortization schedule for the loan term to show how principal, interest, and escrow are applied to each installment or payment.

Click on the Banking Menu and select Loan Manager.

Select Add Loan to enter the following information about the loan.

1. Account Name: This is the same account you created using the steps above.
2. Lender: The Vendor to whom the payments will be made.
3. Origination Day: Date when the loan is processed.
4. Original Amount: The loan's total initial amount.
5. Term The period of time that both parties agree to in order to repay the loan entirely.

Click Next and fill in the following with the payment information of the loan.

1.  Choose the Due Date of the Next Payment.
2. Payment Amount: Installment amount to be paid after every month or decided period.
3. Next Payment Number: Optional to those who have already made previous payments.
4. Escrow Payment Account: Escrow Account.
5. To avoid any penalties, you can also choose to receive alerts 10 days before a payment is due.

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Now provide the interest information of the loan in the following spaces:

1. Interest Rate: Input the rate of interest for the loan. Enter just “ 5 ” with no quotes for a 5% interest rate.
2. Enter the compounding period as specified in the loan documentation.
3.  Payment Account: Payment Account: Bank account used to pay off the loan installments..
4. The interest expense account is created in the above steps to track interest costs.
5. A Loan Fees or Charges Expense Account is kept to track fees and charges associated with the loan.

Once you have reviewed the loan information, you can click Finish. If necessary, edit the loan information by clicking on Edit Loan Information. This concludes this blog post on Quickbooks Loan Manager.

We hope this blog answers all questions and provides the information readers need.