Can I payback an asset loan from company funds? Will I have to report that "loan" as other business income?
Backstory: I bought my father's business, tangible (equipment and location) and intangible (client files, workers, etc) items, from him. I have registered with the state with new name and for payroll as well, have my own EIN. I coded the "loan" in assets, which is for working equipment, computer equipment and leasehold improvements. He says I cannot pay back the loan from the business account as I will have to claim it(the loan) as income and pay taxes.
I thought since it's a loan, the IRS will view as a liability and that the payback is not an expense, just the decrease in loan.

I did not have to obtain a loan to start the business and within a week I started paying him back.
I just want to make sure that I am not doing anything wrong.