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Small Businesses Receive Tax Breaks, Investment Incentives

WASHINGTON, D.C. — Calling small businesses "the anchors of our Main Street," President Obama signed the $30 billion Small Business Jobs Act into law last week.
“Helping small businesses helps get Americans back to work,” says Max Baucus (D-Mont.), chairman of the Senate’s Finance Committee. “This bill creates the right conditions, right now, to help small businesses create jobs by spurring investment and entrepreneurship with tax cuts and improved access to capital.”
The Small Business Jobs Act will provide new tax breaks targeted to small businesses, increase Small Business Administration (SBA) lending limits, waive SBA loan fees, and give community banks $30 billion in new capital to ease lending. In addition, the Act will allow the deduction of the full cost of equipment purchases made in 2010 and 2011 up to $500,000.
The Small Business Jobs Act does the following:

  • Creates a targeted $30 billion Small Business Lending Fund to provide community banks with capital to increase small business lending, and offers $1.5 billion in grants to support $15 billion in new lending through state programs;
  • Incentivizes outside investment by offering a 100% exclusion from capital-gains taxes on small-business investments;
  • Reduces the tax burden for small businesses by allowing them to “carry back” general business tax credits to offset taxes from the previous five years, and allows businesses to count general credits against the Alternative Minimum Tax (AMT) liability, freeing up capital;
  • Increases Small Business Administration (SBA) loan limits, improves access to SBA loans and lowers the costs involved in getting them;
  • Increases Section 179 expensing, allowing deduction of the full cost of capital investments up to $500,000, and extends Bonus Depreciation provisions of the tax code to permit a write-off of 50% of the cost of new equipment;
  • Increases a tax deduction for start-up expenditures to $10,000, double current levels;
  • Creates tools to help small businesses export goods, including the State Export Promotion Grant Program (STEP);
  • Allows self-employed individuals to deduct health-insurance costs to help pay self-employment taxes; and
  • Improves competitiveness in federal contracting by ensuring that no program receives priority over another in the bid process.

This bill is a key step forward in making sure small businesses have the resources they need to do what they do best — create jobs and drive economic growth, says Karen Mills, SBA administrator. "This bill includes billions in tax cuts specifically targeted to small businesses so they can put more of their own resources into growing their business," Mills says. "At the same time, this bill ensures those very businesses have access to the capital they need by extending SBA's successful Recovery loan enhancements and putting local, community banks in a position to be a real partner for small businesses and entrepreneurs." 
Most small-business groups support the legislation, occasionally expressing reservations that it may not go far enough in its efforts to boost lending.
 

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].