Big Boost for Small Businesses
Two key measures to increase the flow of credit and investment to small businesses passed the House of Representatives last week with the support of Congressman Jim Himes.
An essential engine of economic growth and job creation, small businesses have continued to face a credit crunch, which has hampered their ability to expand and increase hiring. Despite the fact that two-thirds of new jobs were created by small businesses in the past fifteen years, more than half of small businesses last year were not able to get the credit they needed.
To help address these problems, the House passed the Small Business Lending Fund Act and the Small Business Jobs Tax Relief Act, both of which are fully paid for and which now go to the Senate for approval.
The news pages at WebCPA.com provide a good rundown on the legislation.
The House passed legislation to incentivize community banks to increase their small-business lending.
The Small Business Lending Fund Act of 2010 was approved Thursday by a vote of 241 to 182. The legislation would establish a $30 billion lending fund for community banks that measurably increase their lending to small businesses. Banks would need to repay all capital investments with interest to the government within 10 years. The Congressional Budget Office estimates that the lending fund would bring in a profit of $1.1 billion to taxpayers, which would be used toward deficit reduction.
The bill would also provide $2 billion in funding for new or existing state lending programs. These programs already exist in around 30 states, use small amounts of public dollars to generate substantial private bank financing, and can use federal dollars to quickly increase small-business lending.
It is estimated that the $30 billion lending fund could generate up to $300 billion total credit to small businesses through local community banks. The companion tax relief bill is designed to spur investments in growing small businesses.
The House approved the Small Business Jobs Tax Relief Act of 2010 on Tuesday by a bipartisan majority of 247-170.
The legislation would provide tax cuts for small businesses to help them grow and create new jobs. H.R. 5486 is companion legislation to H.R. 5297, the Small Business Jobs and Credit Act, which will enhance lending opportunities for small businesses. Both pieces of legislation are offset by closing some existing tax loopholes.
The bill would increase the capital gains exclusion on investments in small business stock to 100 percent (from 75 percent in the American Recovery and Reinvestment Act) for qualifying stock acquired after March 15, 2010 and before Jan. 1, 2012
The bill would also alleviate certain onerous tax penalties on small businesses.
The bill would also allow small businesses to deduct up to $20,000 in small business start-up expenses not related to capital or equipment. In addition, the bill would allow non-recourse Small Business Administration loans to qualify for certain exceptions to the at-risk loan rules, allowing business expenditures made under those loans to be deductible against related business income.
As Jim has often said, helping small businesses grow is the most effective way to create the jobs we need in our economy and our communities. By helping small businesses access the credit and investment they need, we help put Americans back to work. And with this legislative package, we do so while saving taxpayers $1.1 billion in the next ten years.
