Yes, you can deduct the interest you paid on the home equity loan as a business expense, since you used the loan proceeds to purchase business inventory.
Or, you can claim the interest as a personal deduction, if the loan was under $100,000. You might try entering it separately in each area to see which method is most beneficial for you.
Here's more info:
https://turbotax.intuit.com/tax-tips/home-ownership/deducting-mortgage-interest-faqs/L4a9KF9mI#loans
If you claim a home office, enter your mortgage interest in the Home Office Section first. Delete your entry in the Personal section.
Here's instructions relating to that topic:
https://ttlc.intuit.com/replies/6191781
Edited 4/10/18 11:06 am
Need more help. I put the interest under business expenses. However, when I did my personal side, it asked if I had a 1098 (mortgage interest) and I put yes. So it also put the interest on my personal deductions. It was used for purchasing inventory, I don't understand how to get it only on the business side. Do I put no, I did not have a 1098 on the personal side??
On the business side, it asks lets confirm your mortgage interest applies to your home office. It shows the amount since they already know about that. But then says to check YES to include in the home office deduction. It sounds like it would be prorated for my percent of home that is business if I check this and adds the remaining amount to Personal Schedule A. That is not what I want.
If you are going to claim the interest on a home equity loan as a business expense, then don't add it to Personal deductions or Home Office deductions; that would be 'double dipping'. Just add your original mortgage interest in Personal/Home Office. See Edited Answer for how to enter mortgage interest for Home Office.