Income from loan invested in treasury bills

A one time loan and reinvesting does not make a business.

Interest income on Schedule B.

Interest expense might be investment interest.

Your title bothers me. There is no Income, from debt. There are Proceeds of that loan, but that is cash flow and not income. Imagine borrowing for your home mortgage and having to call that Income and report it as Income and pay taxes on it as if that is Income.

Borrowing is not a business model. Your taxpayer has no business activity. Trying to call it business debt makes no sense. And now you would be incurring self-employment taxes on either what you called the income (which really is the proceeds) or the interest earned.

I hope that helps you see how none of this makes sense. And don't let people mislead you into reporting something as business when it clearly is not. The next thing you know, they will be justifying their RV purchase and their Spotify subscription and even their jewelry and nanny as "business" expense.

"client borrowed money from bank with extremely low interest and turn around invested in treasury bills and CDs."

If playing the float really worked like that, then everyone would be doing it. They seem to be overlooking taxes on their earnings.

It was obvious to me that what your client did was borrow at a low interest rate and invest the loan proceeds for a higher return (but still safe, at least until the Treasury defaults because it exceeded  the debt limit).  And yes, this is how banks make their money.  Usually they file an 1120 and not a Schedule C.  But if you want to call it a business and put it on Schedule C, IRS has a code for that:  522100.  "Credit Intermediation."  I wouldn't rule it out, just because he just started doing it.  There's a first time for everything.  However, it may come under the "day trader" rules, where interest goes on Schedule B (like sales go on Schedule D) and only the expenses go on Schedule C.  In my opinion, I have no opinion.