If as a sole buyer of a new corporation via the SBA 7A Loan program, your number one goal is to pay off the loan as quickly as possible and therefore accept a small salary and no annual distributions, then isn't a C-Corp the best legal entity? A pass-through entity's ultimate tax rate is 40% WHILE a C-Corp's tax rate should be 21% thanks to the Tax Cuts and Jobs Act of 2017.
As an example, if your yearly loan amount is $200K of which $100k is principal and $100K is interest. In a pass-through entity, the tax liability of the loan would be around $40K. While is a c-corp the tax liability would be $21K or almost half. Am I missing something?
Also, after the loan is paid off would it be possible to change the C-Corp to an S-Corp?
C Corp vs S-Corp vs LLC - tax implications
by a searcher from Princeton University
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Also, some have argued that WACC increases as tax rate decreases. Thus, WACC of C is more than that S. (I don't use WACC b/c WACC overvalues a firm. I have written articles on that).
The key disadvantage of C is, you have double tax if you wind up with an Asset sale at the back end, ^Searchfunder member suggestion will help you take out cash from C but such take-out will become an income (most likely Ordinary Income) somewhere else, and further, such withdrawal from C does not reduce double taxation in case you wind up with an Asset sale at the back end.