How to Record Loan in Sage 50

record loan in sage 50

“Recording a loan in Sage 50 is essential for businesses that need to borrow money. To record a loan, you must first create an account under the Chart of Accounts section and categorize it as either Long-Term or Short-Term Liability.”

Sage 50, beyond doubt, is an essential tool for businesses and accounting professionals. Within a short span of time, it has become one of the most popular accounting software worldwide. With the improved features and ‘easy-to-operate’ tools it offers, Sage 50 has helped businesses streamline their accounting activities, with the desired efficiency. One such feature embedded in this software is the easy recording of banking transactions and loans.

If you have not yet tried recording loans in Sage 50, we are here to help! All you need to do is to go through this blog. Here, we will look at a step-by-step approach to record loans in Sage 50. We will also discuss other related matters.

Read More : Set up Late Interest in Sage 50 Accounting

Here we go!

What is the Procedure to Record Loans in Sage 50?

If your organization has a bank loan, you need to record this to ensure the accuracy of your accounts. You can perform this by recording the receipt of the said loan, the repayments due to make and interest charges, if any, that needs to pay. We will discuss all these steps in the sections below-

How to Create a Loan Nominal Ledger Account?

  • Open Sage 50 Accounts
  • Click Settings
  • Locate the Financial Settings section
  • Click on Chart of Accounts
  • Now click on the New Ledger Account tab
  • Fill in the relevant information in the following fields-
    • Ledger name
    • Display name
    • Nominal code
    • Category
    • Category group
    • VAT rate
    • Visibility
  • Click Save.
  • Click on New Ledger Account
  • Fill in the relevant information in the fields below-
    • Ledger name
    • Display name
    • Nominal code
    • Category
    • Category group
    • VAT rate
    • Visibility
  • Click Save

How to Record the Receipt of the Loan?

  • Open Sage 50 Accounts
  • Go to the Banking menu
  • Click on the relevant bank account
  • Click on New Entry
  • Select Sale / Receipt from the drop-down box
  • Click on the Other Receipt tab
  • Fill in the necessary information in the following fields-
    • Date received
    • Amount received
    • Reference
    • Details
  • Now Fill in the information required to record the loan such as –
    • Ledger account name
    • Details
    • VAT rate
    • Loan amount
  • Click on Save to record the loan receipt

Click on Save to record the monthly loan repayment and interest accrued. You will need to repeat this procedure every month till the loan is repaid

Enter a Pay Advance or Loan in Sage 50

When using the Sage 50 Accounting, one can only offer an employee a pay advance or loan once they receive their paycheck.

In order to enter a pay advance or loan to an employee:

  • Launch the Paychecks window. 
  • WithIn the Employee box, Click select an employee and click the Tab key.
  • Within the Income tab, enter the amount in the Advance row or enter the amount in the Loan row.
  • Next Fill the remaining details of the check.
  • In order to print a check, click Print.
  • Finally click Process.

Also Read : How to Enter Opening Balances in Sage 50


In the sections above, we have discussed a step-by-step procedure to record loans in Sage 50. If you are still having any issues in implementing the steps mentioned above or if you have any more queries, you may consult with some of the authorized Sage experts.

Accounting Professionals & Specialized Experts

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Frequently Asked Questions (FAQs)

Do I need to Record Loan Repayment in Sage? Where do the Loan repayment and Interest appear?

Yes. Every time you make a loan repayment, you have to record this in Accounting. The repayment is displayed on the Balance Sheet Report and it reduces the balance on the Loans nominal ledger account. The interest on the loan is displayed in your Profit and Loss Report. It increases the balance on the Loan interest paid nominal ledger account.

How can I Record the Repayment of a loan using the Payment Journal in Sage?

1. Click on the Payment Journal tab
2. Select the Make Other Payment tab
3. Select a vendor or create a new vendor for the loan issuer
4. Click on the bank loan liability tab in the Account column
5. Enter the loan amount in the Account column 
6. Choose the interest expense account in the next line 
7. Enter the interest amount in the Account column 
8. Click on the Post/Process tab

How can I Record the repayment of a loan using the General Journal in Sage?

To record the repayment of a loan using the General Journal in Sage:
1. Open the General Journal window.
2. Select the Credit bank account
3. Now click on debit bank loan liability account.
4. Choose Debit interest expense account, if needed.
5. Verify the date 
6. Click on the Post/Process tab

What are the documents required for small organizations to apply for a PPP loan in Sage 50?

You need to provide the below-mentioned documents required for small organizations to apply for a PPP Loan in Sage 50
1. Payroll report summary with the correct bank statements
2. Payroll expenditure confirmation files
3. Documents to show that you have at least a 20% stake

How can one Record Loans and loan Payment Journal Entries

In order to do so, you need to:
Step 1: To record the initial loan. Bear in mind that recording the initial loan is the foremost step of the payment process. 
Step 2: In order to record the loan interest. Loan interest: potentially is our least favorite part related to loans.
Step 3: Next record the interest payments. 
Step 4: Finally record the loan payment.

How can one Record Bank Loan in Balance Sheet

The complete amount of your loan should be recorded as a liability within your business’s balance sheet. The two liability accounts should be set up:
1. One for short-term and one for long-term. 
2. The offset is either an increase to cash or the recording of new assets like a car, truck, or building

How can one Fix Error the loan NDR cannot be greater than the loan Amount

In case you see this error, this means the Normal Deduction Rate of a loan is much greater as compared to the loan amount. For this, you need to check all the loans within the employee’s record, as old loans might lead to this error when you add a new loan.

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