{"id":3746,"date":"2020-09-25T07:20:48","date_gmt":"2020-09-25T07:20:48","guid":{"rendered":"https:\/\/www.intrepidexecutivegroup.com\/blog\/?p=3746"},"modified":"2020-09-25T07:20:48","modified_gmt":"2020-09-25T07:20:48","slug":"are-business-loans-tax-deductible","status":"publish","type":"post","link":"https:\/\/www.intrepidexecutivegroup.com\/blog\/are-business-loans-tax-deductible\/","title":{"rendered":"Are Business Loans Tax Deductible?"},"content":{"rendered":"

Taxes are one of the biggest expenses you’ll encounter when running a business. Assuming your business is profitable, you’ll have to pay taxes. The good news is that you can often claim write-offs to minimize your business’s tax liabilities. If you buy a product or service that is considered essential to your business’s money-making activities, you can typically claim it as a write-off. As a result, you might be wondering whether business loans are tax deductible.<\/p>\n

Are Business Loans Tax Deductible?<\/span><\/h2>\n

\"\"<\/a>Loans Themselves Aren’t Tax Deductible
\n<\/span><\/h2>\n

Business loans themselves generally aren’t tax deductible. If you obtain a $500,000 loan with which to finance your business, you won’t be able to claim it as a write-off. The Internet Revenue Service (IRS) doesn’t allow business owners or entrepreneurs to write-off loans.<\/p>\n

Why can’t you claim a business loan as a write-off? Well, because it’s a loan, you won’t incur the cost of the full cost of the loan. If you purchased a product or service for $500,000 that your business needs to perform its operations, you can claim it as a write-off. With a loan, on the other hand, you won’t pay the lender the full cost of the loan. You’ll essentially borrow money from the lender.<\/p>\n

Interest Fees on Loans Are Tax Deductible
\n<\/span><\/h2>\n

\"\"<\/a>While business loans themselves aren’t tax deductible, this doesn’t apply to interest fees. The IRS allows for the deduction of interest fees on business loans.<\/p>\n

Interest, of course, is how lenders make money on loans. It’s a percentage-based fee that’s paid periodically over time. It can range anywhere from 3% to 70% — sometimes even more, depending on what lender and loan type of you choose. Regardless, any money that you pay in interest on a business loan can be claimed as a write-off.<\/p>\n

The Bottom Line on Business Loans and Taxes
\n<\/span><\/h2>\n

Principle payments aren’t tax deductible. A principle payment is simply a repayment. Using the same example from above, if you obtained a $500,000 business loan, you’ll be responsible for paying $500,000 in principle payments. That money is simply being transferred back to the lender, so the IRS doesn’t view it as tax deductible.<\/p>\n

Fortunately, you can claim interest fees as a tax write-off. Interest fees aren’t repayments. You don’t borrow the interest that you pay to a lender. Therefore, you can claim it as a write-off. Just remember to keep track of all your interest payments so that you can take advantage of this write-off when you prepare and file your taxes.<\/p>\n

This article was brought to you by\ufffdIntrepid Private Capital\ufffdGroup<\/a>\ufffd\ufffd A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our\ufffdwebsite<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Taxes are one of the biggest expenses you’ll encounter when running a business. Assuming your business is profitable, you’ll have to pay taxes. 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