There have been two large changes to loans offered by the U.S. Small Business Administration (SBA). If your business utilized a loan from the SBA, check out these two changes to see if your loan qualifies in the changes:
1) Paycheck Protection Program loan expense deductions changed by recent Omnibus bill: A brief from the Congressional Research Service, updated December 31, explains previous guidance from the Internal Revenue Service regarding recipients of forgivable loans under the Paycheck Protection Program (PPP) and their inability to claim a deduction for expenses funded from forgiven loans. The inability to claim deductions was nullified by the recently-enacted Consolidated Appropriations Act (H.R. 133), which included the Tax Relief Act of 2020. Under this new legislation, borrowers can now deduct expenses paid out of forgiven PPP loans.
2) SBA extends COVID-19 EIDL application deadline through December 31, 2021: On December 30, the Small Business Administration (SBA) announced that the deadline to apply for the Economic Injury Disaster Loan (EIDL) program for the COVID-19 pandemic disaster declaration is extended to December 31, 2021. Economic Injury Disaster loans are offered at affordable terms, with a 3.75% interest rate for small businesses and 2.75% interest rate for nonprofit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. Loan applications will be accepted through December 2021, pending availability of funds.
