The U.S. Small Business Administration (SBA) has released two new changes to small business loans.
- Paycheck Protection Program (PPP) 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 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.
- SBA extends COVID-19 Economic Injury Disaster Loan (EIDL) application deadline through December 31, 2021: On December 30, the SBA announced that the deadline to apply for the EIDL program for the COVID-19 pandemic disaster declaration is extended to December 31, 2021. EIDLs 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. Every eligible small business and nonprofit are encouraged to apply to get the resources they need.