PPP Interest paid by SBA

Are you sure what the SBA paid was the PPP interest? Or, was it Small Business Debt Relief payments?

"Established by the CARES Act and revised by the Economic Aid Act, the SBA is authorized to automatically pay 6 months of principal and interest, and any associated fees that borrowers owe for all 7(a), 504, and Microloans (excluding PPP loans and EIDL loans) up through September 27, 2020 even if not fully disbursed.

The borrower did not need to apply for this assistance.

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief"

There also was EIDL loan repayment and Bridge loan repayment:

https://gpwcpas.com/grant-credit-loan-and-other-relief-comparison-chart/

I've seen PPP forgiveness, but not SBA payments for that interest. I can keep looking, though.

With all the programs out there, these little details matter. SBA made lots of payments against loans, even to themselves! But the PPP interest isn't one of those that is an expense for the part of the PPP Loan that was changed from Loan to Forgiven. That's why some banks are having to give back interest paid to the borrower who wasn't sure they would get or even apply for forgiveness, so they made a few interest payments and then got their forgiveness after all.

And I believe this plays directly into the late IRS guidance that if you reasonably expect your PPP Loan to be forgiven, you could report it as such.

"Rev. Proc. 2021-48 covers the timing of receipt of PPP forgiveness tax-exempt income. Taxpayers may treat such income as received or accrued when either (1) expenses eligible for forgiveness are paid or incurred; (2) an application for PPP loan forgiveness is filed; or (3) PPP loan forgiveness is granted. The revenue procedure also describes adjustments that must be made on an amended return; information return; or, for certain partnerships, an administrative adjustment request, when a PPP loan is only partly forgiven."