Beginning April 6, 2021, the U.S. Small Business Administration (SBA) is expanding its Economic Injury and Disaster Loan (EIDL) program, the organization announced in a press release. Small businesses who originally took out an EIDL loan for up to $150,000 for six months can extend that loan for up to 24 months and receive additional funds for a total of $500,000 in relief.
The SBA release stated that businesses that received an EIDL loan for up to six months and $150,000 need not submit a request to increase their loan amount. Rather, the SBA will reach out via email for details on how businesses can request additional loan funds prior to the April 6 launch date of the extended program.
Any new EIDL loan applications will automatic be considered for up to $500,000 to cover 24 months of business, according to the SBA press release.
Additionally, the SBA has extended the deferment period for both Paycheck Protection Program (PPP) and EIDL loans through 2022. The first payment for all coronavirus related disaster loans disbursed in 2020 won’t be due until 24 months of loan origination. The first payment for loans issued in 2021 will be due 18 months from the loan origination date.
Taxes and the EIDL Program
Typically, forgiven loans qualify as taxable income. However, given the unprecedented circumstances of the pandemic, the Internal Revenue Service has made EIDL Advances and forgiven EIDL funds non-taxable. EIDL advances do not count as part of a businesses gross income, according to IRS notice N 2021-06.
Additionally, the same notice says that business expenses that are normally tax deductible, including rent, payroll and utilities, are still deductible for the 2020 tax year even if those expenses were paid using funds from an EIDL loan or an EIDL advance.
However, some states may still consider SBA disaster loans as taxable income, so it’s important to consult with a tax professional before filing this year if you are a business owner or independent contractor who received funds from the PPP or EIDL programs.
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This article originally appeared on GOBankingRates.com: Small Businesses Can Get Another $500,000 from the SBA