If it is not a seller financed loan then enter it as plain income like from a bank .... either Sch B entries will suffice since both will put it on the Sch B with the exact same result. Interest income is interest income and you do not need to send a 1098 to report it on your return. Putting it on line 21 could produce an IRS letter for an explanation ... putting it on the Sch B will not.
