Ok ... if PP is reporting the loan as income on the 1099-K form incorrectly and will not change it how it is reported then you must correct this on the Sch C yourself ... go ahead and add the loan in the income section then to an offsetting expense to negate that amount. Who ever is amending the prior year returns should have already thought of this solution. Then whatever you used the loan for (like inventory) will be naturally expensed in inventory or other expense. Also the interest or fee paid for the loan is also deductible.
