If the SBA Made Six Loan-Payments on Your Behalf, Are You Taxed?

But do you know about the other SBA loan programs?

There were several loan programs that pre-dated the pandemic and didn’t require a disaster to occur in order for you to qualify. These included…

7(a) loans: general small-business loans of up to $5 million
504 loans: loans of up to $5.5 million to provide financing for major fixed assets such as equipment or real estate
Microloans: short-term loans of up to $50,000 for small businesses

IMPORTANT

If you took out one of those loans, the CARES Act required the SBA to provide you with a six-month loan payment subsidy.

This brings up an important question…

Do you pay tax on the six-month
loan-payment subsidy or not?

We’ll try to answer this thorny question when you read the full article.

We’ll explain the CARES Act six-month loan-payment subsidy rules in easy-to-understand language when you read the full article.
We’ll tell you why government disaster payments to businesses are not considered to be tax-free gifts. To get the whole story, read the full article.
We’ll explain why, in the past, the IRS advised that payments from government units are considered to be taxable income to the business borrower. For full details, read this full article.
We’ll tell you why the “general welfare exclusion” may come into play. What exactly is this exclusion? We’ll give you full information when you read the full article.
We’ll tell you the good news about how Congress can make the subsidy-payment tax free when you read the full article.
And much more