Loan Payments MADE by the SBA-Taxable?

February 23rd, 2021 at 7:29 AM

Are you one of the millions of businesses that have an outstanding non-disaster Small Business Administration (SBA) loan? These include

If so, you have already benefited, or soon will benefit, from a little-known provision included in the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Lawmakers appropriated $17 billion so that the SBA could provide a temporary loan payment subsidy to businesses with these non-disaster SBA loans. Under this provision, the SBA automatically makes monthly loan payments on behalf of borrowers. There is no need to file an application.

Now, with the newly enacted stimulus law (December 27, 2020), lawmakers made this loan subsidy program even better. Its massive second stimulus bill expands the loan payments for up to 14 months for many businesses. It also extends the program to loans approved by the SBA as late as September 30, 2021.

Even better, the new law makes tax-free the SBA loan payments made on your behalf. And that’s not the end of the good news. Under this new law, you can deduct the interest and fees that were paid by the SBA on your behalf.

Mark S. Fineberg, CPA

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