The original post asked about regular bank interest and a sole proprietor ... if a sole prop has a bank account that earns interest it is not entered on a Sch C ... it goes to the Sch B. If the taxpayer simply holds mortgages on properties they have owned/sold and does nothing to earn the interest then that also goes on the Sch B.
NOW ... if the business of the Sch C is the making of loans of money then that is Sch C income and needs to reported as such.
