Thanks for responding so quickly Doreen!
I tried reversing one pay and re-processing. The issue I am facing now is that when the deduction is allocated to the business loan, processing the pay increases the amount of the loan by the deduction. Then when I allocate the bank transaction to the business loan it reduced by the same amount, effectively returning it to the same value. That won't reduce the loan liability over time but rather increase and decrease each pay/bank transaction cycle.
Should I be configuring the deduction linked payable account differently?