Paying back the principal of a loan is not a tax deduction but the interest you paid to them for the loan is a deduction on the interest expense line. That is why you not seeing it as a Schedule C expense. Maybe this explanation will help: they give you the money to use and then you eventually give it back. When they loaned you the money it should not be reported as income on your tax return. So when it is paid back it is not an expense, except the interest part.
