SBA Loan Forgiveness

As part of the CARES Act the SBA paid six months of principal, interest, and associated fees that borrowers owed for certain types of loans. If you already received six months of loan payments, the Consolidated Appropriations Act brings some added benefits.
​

The Consolidated Appropriations Act (section 278) makes all payments described in the CARES act related to SBA loan re-payments (section 1112(c)) non-taxable and allows related expenses to be deducted by the business receiving the benefit.

In addition to making the debt forgiveness tax-free, the Consolidated Appropriations Act also adds another 8 months of loan repayments by the SBA, this time limited to a monthly cap of $9,000, for underserved industries. Those industries are identified by the first digits of their NAICS codes, as follows:

• 61 – Educational Services
• 71 – Arts, Entertainment, and Recreation
• 72 – Accommodation and Food Services
• 213 – Mining/Oil/Gas Extraction
• 315 – Apparel Manufacturing
• 448 – Clothing and Clothing Accessories Stores
• 451 – Sporting Goods, Hobby, Musical Instrument, and Book Stores
• 481 – Air Transportation
• 485 – Transit and Ground Passenger Transportation
• 487 – Recreational Transportation
• 511 – Publishing Industries (non-internet)
• 512 – Motion Picture and sound Recording Industries
• 515 – Broadcasting (non-internet)
• 532 – Rental and Leasing Services
• 812 – Personal and Laundry Services

The loan payments will be made by the SBA from February 1, 2021 through September 1, 2021. However, keep in mind that for New Hampshire purposes this debt forgiveness will still be taxed as debt forgiveness income.

If you have additional questions contact your accountant and remember to follow us on LinkedIn to stay up to date on all of our posts.