If I receive a personal loan of $30,000.00 (at a 5.7% interest rate)
from a family member for the purpose of funding a small business, and
1) that loan amount is applied [and spent] entirely on equipment and
supporting materials for this business over the course of one year,
and 2) the business has negative income (a loss) for the year, will I
have to pay some amount of tax on this loan?

Dear Doctor Bones. 

The money you received is a loan. 

It's just like any other loan that you take out
from the bank or a finance company. 

So, don't worry. At this point, it's not income.

If you had a double-entry accounting system, the
loan would be a liability on your Balance Sheet. 

Make sure that you pay the interest when it's due.
Or if you must delay the payment, have your family
add an addendum to the loan explaining how the late
interest is it to be handled. Will it be added to the
note? Will interest be charged on it? Put it in writing.

You will only face tax if you never pay the loan back.
Then it will become a cancelled debt - which is either
taxable income, or a gift, depending on your family's
nature. But that's a long way off.

Naturally, your business will succeed. And you'll pay
it all back.

Good luck.

Best wishes,

Your TaxMama-ga

Since when does anyone pay tax on a loan?

The most qualified answer will come from your local CPA, but I'll give
you my opinion.

The answer is no.  You do not pay taxes related to interested paid on your loan.

If you meant, "Will I 'owe' (less) taxes," the answer, once again is
no.  This type of interest is not tax deductible on a personal income
tax return.

markvmd,

SHHHH!!!  Don't give *them* any ideas!  ;-)