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Loans

If your client has outstanding loans, lines of credit, or financing arrangements, each one needs to be tracked and reconciled separately. Loan activity includes both payments and advances (draws or disbursements), and both sides need to be recorded accurately.

Kick handles loan accounting through a combination of categorization, transaction splitting, and rules.

Setting Up Your Chart of Accounts

Before categorizing loan transactions, make sure your Chart of Accounts includes the relevant accounts:

• Current portion of loan liability (Balance Sheet, Current Liabilities) — for the portion of the loan due within the next 12 months
• Long-term loan liability (Balance Sheet, Non-Current Liabilities) — for the remaining balance due beyond 12 months
• Interest expense account (Profit & Loss) — for recording interest charges (e.g., "Interest Expense" or "Loan Interest")

Use the loan's amortization schedule (if applicable) to determine how much of the outstanding balance falls into each bucket, and adjust at close as needed.

To add these accounts, navigate to Accounting → Chart of Accounts and click the + icon on the appropriate subtype row.

{% hint style="info" %} For clients with multiple loans, create distinct accounts for each (e.g., "SBA Loan — Current," "SBA Loan — Long-Term," "Vehicle Loan — Current," "Vehicle Loan — Long-Term") to keep balances easy to track and reconcile. {% endhint %}

Categorizing Loan Payments

When a loan payment syncs into Kick, it will appear as a single transaction. You have two options depending on how your lender reports the payment:

If principal and interest are separate line items

Some lenders or bank feeds break out principal and interest as separate transactions. In this case, categorize each one directly:

• Categorize the principal payment to your current loan liability account
• Categorize the interest payment to your interest expense account

If the payment is a single lump sum

Most loan payments sync as a single amount that combines principal and interest. Use a split to break the transaction into its components:

1. Select the transaction
2. Click Split
3. Allocate the principal portion to your current loan liability account
4. Allocate the interest portion to your interest expense account

{% hint style="info" %} Your lender's statement or amortization schedule will show the exact principal and interest breakdown for each payment. {% endhint %}

Proceeds and Payments

Proceeds — whether from a new loan, a draw on a line of credit, or any other financing arrangement — also need to be recorded.

When loan funds are received, the deposit should be categorized to the appropriate loan liability account, not as income.

For new loans, confirm that both the proceeds and any associated origination fees are booked correctly. Fees may need to be recorded separately depending on your client's accounting method.

For lines of credit, track each draw and repayment individually to ensure the outstanding balance stays accurate.

Automating with Rules

If your loan payments are a consistent amount (e.g., a fixed-rate mortgage), you can create a Split Rule to handle this automatically.

For example:

• Split transactions from "Rocket Mortgage" with amount $4,300 — allocate $3,200 to the loan liability account and $1,100 to interest expense

Split Rules run automatically when new transactions sync, so once set up, your loan payments will be categorized correctly without manual intervention.

For variable-rate loans or loans where the principal and interest amounts change, you will need to adjust the split manually based on your amortization schedule.

Reconciling with Journal Entries

As an alternative to splitting transactions, you can categorize the full loan payment to the loan liability account and then create a journal entry to break out the interest portion. This approach works well when:

• You prefer to keep the original transaction intact on the transactions page
• You're reconciling against lender statements that show the total payment amount
• You want to batch interest adjustments at close rather than splitting each transaction individually

To do this:

1. Categorize the full payment(s) to your loan liability account.
2. Create a manual journal entry that debits Interest Expense (or other loan-related expenses) and credits the loan liability account.

This nets out to the same result as a split — principal reduces the liability, interest and other expenses hit the P&L — but keeps the transaction-level data cleaner for reconciliation. If the interest amount is consistent, you can set this up as a recurring journal entry.

Reviewing Loans at Close

As part of your close workflow, reconcile each loan separately:

• Verify loan balances in Kick against lender statements
• Confirm principal and interest splits are recorded correctly on each payment
• Ensure all advances and draws are categorized to the correct liability account
• Review the current vs. long-term split and reclassify as needed based on the amortization schedule
• For new loans originated during the period, confirm the proceeds and any associated fees are booked correctly