Can you write off a small business loan on your taxes?

Of course taxes and what is deductible and what is not is a little complicated. You can not write off the loan HOWEVER the purchases you make are eligible. Here is a list of what some of those eligible deductions would be:


Office supplies

Auto: you can make the purchase of a new car/work van a capital expense, after that you need to determine what percentage of your mileage is used for business. If you use your vehicle 50% of the time you can write off 50% of your vehicles incurred expenses (gas, maintenance, insurance, repairs)

Advertising: anything such as ads, website etc

Professional Fee's: consulting, accountants, lawyers etc

Office Furniture: only on the year that its purchased also note depreciation of the furniture is eligible

Business Entertainment and Travel: Entertainment of clients or prospective clients is eligible for 50%. Airfare, hotels, rental cars, taxi's and other similar things are eligible



The IRS does not let individuals write off interest from personal credit cards or loans. However, it’s a different story for businesses. They have deemed business interest to be a legitimate business expense, and that is tax deductible.


If you have paid interest for business credit cards or a business loan of any kind, you can deduct this amount on your taxes. Yes, you will want to have the back up to prove that the money was spent on business activities just in case you are audited.


So to summerize if you have paid interest on a credit card or loan there are definitely many ways to write off those items as long as they were used for business purposes. Be sure to keep good records.


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Venture Capital Infusion vs Business Loans

As soon as you say the words business loan, the assumption is a negative one.  However if you say Venture Capital infusion then its far more positive.  But is this true?

Let's examine the main differences
With VC money you will lose power to make decisions and overall earning potential from you business
A loan will cost you a percentage of your profits in the short term, BUT you will not relinquish control of the decisions made and you retain all equity of your business.

Why do you need this money?  If it is strictly to obtain more inventory that you will sell with in a short period (lets say 90 days) then your probably better off taking a loan.  Yes your margins will be less and at times minimal but there is value to selling inventory even if your profits are not maximized right away.  By being able to sell more inventory you will most likely increase your overall customer base.  If you product or service is one that will bring back repeat business then this is extremely valuable.  The average business can see a customer return 3-4 times per year.  In addition to the repeat business there are also referral business you can receive from those new clients.

Now if you took VC money and your business grows but you are now sharing revenue then you have really cut into your profits but with the loan you will reap the rewards, maybe not so much the first time around but after that you will be thankful you chose not to bring in VC money.

Bottom line unless the VC money is bringing something to the table like a large customer base and or a certain skill or service that you can't replicate then a loan is most likely the smarter decision.

So lets revisit the ASSUMPTION that VC money is  positive and a loan is negative.  In this particular example that assumption could not be further from the truth!

For more information about getting money to grow your business please contact me at businessfastcash@gmail.com