Your question isn't really clear.

Business Credits from any State or Federal programs would have nothing to do with the fact that the business person accepted the terms of a Loan. You told us this: "gave my client a no-interest loan for inventory and working capital, which is expected to be paid back."

They don't just Give it; you apply and accept the Offer, or you decide you don't want to borrow. Does that loan have a forgiveness component?

So, if you take out a loan that has no forgiveness component, why would it Not need to be repaid?

And for this part: "The company had net income of $10,589. Upon completing a DRAFT of her return, she ends up owing Illinois $683"

Doesn't tell us anything about the Loan. Is that simply Tax on Income? That's a nice 6%.