Hi emilee If you want to use a bill to decrease the amount of the loan/liability you will have to select the loan/liability account in the category column, but you would only do that usually if you are paying back the loan.

An option would be to create a journal entry impacting the accounts you wish to impact. 

If you could go into a bit more detail on what the bill is for and if you transferred money from the loan into your bank? If so, you would record money transferred from the loan liability to the bank account which would then record the loan balance. Then you would pay the bill as normal through the bank.

You would then expense to the loan category when you are paying the loan back.