What is a loan – how is it booked?

Taking out and booking loans is not only important for startups. Even companies that have been on the market for years are always faced with investments that require a loan. Important, especially when it comes to a suitable provider for the loan or loan, is not only the interest and the repayment, but also other factors that relate, among other things, to the discount and the booking of the loan.

From an accounting perspective, a distinction is also made here between regulations with regard to a private loan and a commercial loan. While the latter variant was one of the best-known standard solutions over a long period of time, private loans are also very popular these days. Here, as the name suggests, the sums are issued by private individuals to relatives, companies or other private individuals. One thing is certain: a loan is a partially complex issue, which of course must also be recorded in the form of the corresponding bookings.

What is a loan?

What is a loan?

By classic definition, a loan is a contract in the context of which one party (such as a credit company) “lends” a certain amount to another party (such as a company). With regard to the exact meaning, however, one cannot speak of a classic loan, since “not only” the amount borrowed itself, but also interest in a predetermined amount must be paid.

There is a historical background to the fact that the term “loan” is still associated with the word “loan” even today. In the Middle Ages, objects and properties were actually lent within the framework of the word “fief”. Over the centuries, however, the so-called “feudal system” was known to lose importance and – with the expansion of trade – lending money became more important.

The classic basis for a loan today is a contract in writing. Among other things, this specifies the specific framework conditions for the agreement, such as:

  • the total sum
  • the period
  • interest rates
  • the disagio

firmly. The borrower is often also allowed to redeem the loan prematurely.

Looking for the right provider – the online loan comparison

Looking for the right provider - the online loan comparison

Admittedly, due to the large number of companies that offer loans today, it is often difficult to make a final choice. However, if you compare loans with one another at finanzcheck.de, you can clearly compare the individual framework conditions for your personal loan request.

The loan from an accounting perspective

Small and medium-sized companies in particular often choose not to outsource the areas relating to accounting and bookkeeping, but instead to deal with them themselves.

However, especially in connection with loans, the question arises as to how not only the individual installments but also other loan costs have to be posted to the corresponding accounts.

After all, it is not only important to meet the requirements of the tax office, but also to ensure that other documents, such as EÜR, can be created correctly.

So how does the loan or its installments have to be booked?

How do I book a loan? What is to be considered?

How do I book a loan? What is to be considered?

The basic structure for the bookings related to the topic of “loans” is (at least) two accounts. On the one hand, this requires the “ Liabilities to banks ” account and, on the other hand, the “Bank” account.

Said “liabilities to banks” are then split up even further based on different terms. The categorizations of a term of up to one year, a term of between one and five years and a term of more than five years apply.

Attention: From an accounting perspective, loan costs are not “liabilities”

Attention: From an accounting perspective, loan costs are not "liabilities"

Interest is one of the most well-known loan costs. However, like other loan costs, they are not booked to the liability accounts mentioned above, but – in the case of interest – are summarized under ” Interest expenses “.

In terms of posting, this results in the posting rate: interest expense to bank.

The situation is a little bit different with the so-called ” disagio “. This is a sum that represents the difference between the agreed loan amount and the final payment amount. A corresponding account (“discount”) is then created in order to book this correctly in accounting terms. The booking is then made on the basis of the posting rate ” discount on liabilities to banks “. What is special is that the discount as prepaid expenses is distributed over the term of the loan contract.

Regular bookings – repayment of the loan

Regular bookings - repayment of the loan

Of course, not only the sum of the loan granted, but also the due date of the individual installments is recorded in the loan contract. But how is the monthly repayment actually booked?

Accordingly, the individual installments are always based on the general posting rate: liabilities to banks due to banks. However, with regard to the different types of loans, there is a need to:

  • Installment loan (characterized by constant installments and the corresponding interest payments)
  • Maturity loan (the entire loan amount is repaid as a whole after the term has expired)
  • Annuity loan (here the total amount from the repayment and the interest accruing – regardless of the year – is always the same. This ensures that more and more is repaid over time and the share of interest in the total amount falls)

Sample calculation based on an installment loan:

Assume that a company decides to take out a loan in the amount of 100,000 dollars and opt for a term of ten years at an interest rate of 5 percent.

As long as the corresponding amount is “only” repaid, the booking is made as follows:

Liabilities to banks ($ 10,000) to bank ($ 10,000)

If interest accrues, this must of course also be taken into account in accounting:

Liabilities to banks ($ 10,000) and interest expenses ($ 5,000) to bank (total amount: $ 15,000).

“Translated” means that a total of 15,000 dollars are debited to the “Bank” account. However, the amount is made up of both the installment and the interest.

Even if the guidelines for the accounting treatment of loans – especially for the layperson – may sound a little confusing, it quickly becomes apparent in everyday life that far fewer rules need to be observed here than initially suspected. As a rule of thumb, the basic knowledge applies: “Bank” is one of the active accounts and therefore carries out in the “debit” (first position in the booking record). “Liabilities”, however, are assigned to the passive accounts.


Anyone who observes this rule and at the same time ensures that the “liabilities to banks” are not mixed with the interest and similar items forms the ideal basis for correctly recording his loan.