ECONOMIC RELIEF CONTINUES
Updated: Feb 8
With Covid-19 cases down significantly in California and restrictions on businesses lifting, there is still a long way to go to get our businesses back to pre-pandemic success. Thankfully, the Small Business Administration (SBA) is continuing to offer businesses help to carry them through.
The SBA has increased the maximum amount small businesses and nonprofits can borrow through the Economic Injury Disaster Loan (EIDL) program.
Loans approved prior to April 7, 2021 for less than $500,000 are likely eligible for an increase based on new loan maximum amounts announced March 24, 2021. Businesses that received a loan subject to the previous loan limit can submit a request for an increase at this time. SBA is now reaching out directly to loan borrowers via email to provide more details about how businesses can request an increase. Borrowers should expect to receive emails from @sba.gov or @updates.sba.gov addresses.
If an applicant accepted a loan for less than the full amount originally offered, the applicant will have up to two years after the date of the loan promissory note to request additional funds. Applicants may continue to request additional funds even after the application deadline of December 31, 2021.
If you received an EIDL for your small business, the deferment period for repayment has been extended:
-For all SBA disaster loans made in 2020, the first payment due date has been extended from 12 months to 24 months from the date of the note.
-For all SBA disaster loans made in 2021, the first payment due date has been extended from 12 months to 18 months from the date of the note.
Even though there is an automatic deferment on EIDLs, borrowers may still make payments if they choose to. You can set up online payments through pay.gov or you can mail your payments (be sure to include EIDL loan number on mailed-in checks) to:
U.S. Small Business Administration
721 19th Street
Denver, CO 80202
California is moving in the right direction with Covid-19 cases but has been a bit stagnant with Covid-relief tax guidance.
If you received an EIDL in 2020, don’t expect to file your tax returns in the near future as California is still waiting to determine if the EIDL advance grants are taxable. Filing now could mean you end up paying higher taxes.
The state of California is also continuing to work to get guidance on PPP tax conformity. Many other states have adopted tax codes that are in harmony with how a bipartisan Congress intended for PPP loans to be treated, making them truly tax-free. This approach excludes forgiven PPP loans from taxable income and doesn’t affect the deductibility of business expenses paid with PPP funds. Our fingers are crossed that California will soon approve similar guidance, further helping small businesses.
As we know more, we will continue passing the information along!