> For the complete documentation index, see [llms.txt](https://docs.kick.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kick.co/common-workflows/loans.md). # Loans Loan payments need special handling in Kick because each payment is made up of two parts - principal (reducing what you owe) and interest (an expense). If you record the full payment as a single expense, your books will overstate your costs and your Balance Sheet won't reflect the correct loan balance. This is one of the areas where working with an accountant or bookkeeping partner makes the most sense, especially if you have multiple loans or years of history to catch up on. *** ### Why it matters When you make a loan payment: * The **principal** portion reduces your liability on the Balance Sheet - you owe less * The **interest** portion is an expense that appears on your P\&L Recording both correctly keeps your Balance Sheet accurate (showing what you actually owe) and your P\&L honest (showing only the real cost of borrowing, not the full payment amount). *** ### What you need Before setting up loan accounting in Kick, you need your **amortization schedule** - the breakdown of each payment into principal and interest. Your lender provides this, usually at loan origination or available in your online account portal. *** ### How to record loan payments **If your lender sends separate line items** for principal and interest, categorize each one directly to the right account. **If payments come through as a single amount**, use [Splits](/common-workflows/splits.md) to divide the payment: 1. Open the loan payment transaction 2. Click **Split** 3. Allocate the principal portion to your loan liability account 4. Allocate the interest portion to your interest expense account 5. Reference your amortization schedule for the exact breakdown **To automate this for fixed payments** (like a fixed-rate mortgage or car loan where the split ratio is consistent), set up a Split [Rule](/common-workflows/rules.md). Kick will split the payment automatically every time it syncs. *** ### Recording loan proceeds When you receive a loan, the funds coming into your bank account are **not income** - they're a liability. Categorize the deposit to your loan liability account so it appears correctly on the Balance Sheet, not on your P\&L. *** ### Multiple loans Keep separate accounts for each loan so you can track balances and payments independently. Your accountant can set these up in your Chart of Accounts. *** ### When to bring in a partner If you have multiple loans, years of history to catch up on, or you're unsure about your amortization schedule, this is work worth handing off. A bookkeeping partner can set up the accounts, enter historical payments correctly, and reconcile each loan to your lender statements. -> [Partner Program](/referrals-and-partnerships/partner-program.md) --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.kick.co/common-workflows/loans.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.