The House voted today (Sept. 23) along party lines to approve a $42 billion bill to aid small businesses, The Hill.com reported. The legislation includes $12 billion in tax breaks and creates a $30 billion fund to expand credit access for small businesses.
President Obama, who was attending the U.N. General Assembly in New York when the bill passed, said he will sign the House bill next Monday.
“After months of partisan obstruction and needless delay, I’m grateful that Democrats and a few Republications came together to support this common-sense plan to put Americans back to work,” he said in a statement.
Republications opposed the bill, claiming that it represented more unnecessary spending. Sixteen Democrats, many of whom face tough re-election campaigns this fall, also voted again the measure.
The Senate voted last week (Sept. 16) to pass a similar small-business bill that offers a comprehensive menu of tax cuts, incentives and a $30 billion lending fund. Though some owners see a devil lurking in the details, the legislation has won widespread support from the small-business community. Here’s a quick look at key provisions of the bill.
The Small Business Lending Fund would make up to $30 billion in capital available to financially sound banks that have less than $10 billion in assets on their books. The goal is to encourage them to lend to small businesses. If participating banks increased lending to small businesses by 10 percent over the previous year, they would pay as little as 1 percent on the capital they received from the fund.
States as well as business owners would benefit from the State Small Business Credit Initiative. This initiative would help states with successful credit programs that are facing cutbacks, by making them eligible for continued funding. The bill would create a $10 billion pool to extend more credit to creditworthy small businesses and manufacturers. To gain access to the pool, states would need to show there had been at least $10 in new funding for every dollar of the federal infusion.
The bill also would put more muscle into the Small Business Administration lending programs by lifting the ceiling for a variety of SBA loans.
Tax relief is an integral part of the legislation, raising the $5,000 ceiling on new-business expense deductions to $20,000 in 2010 and 2011 and exempting qualifying investments from capital gains tax. In addition, the general business credit would be extended to a five-year carry-back, to relieve previous years’ tax liabilities. Business owners also would be able to write off the whole cost of acquiring property immediately, rather than over time.
For businesses looking toward overseas markets, the bill would increase support to the Office of the U.S. Trade Representative to promote exports.
There is, though, a worm in the apple that the Senate is holding out for small businesses. It comes in the form of higher Internal Revenue Service penalties to help finance the bill. Particularly worrisome is the increase in penalties for failure to file information returns, such as 1099s, for payees. New 1099 reporting requirements that were passed as part of the Patient Protection and Affordable Care Act may greatly increase the filing burden on businesses beginning in 2013.
Nonetheless, the bill has gained the support of 187 business and trade groups, including the National Small Business Association .
"America’s small businesses have been struggling for more than two years now,” said Todd McCracken, the NSBA president. “This legislation, along with the full repeal of the new 1099 provision, cannot and should not be bogged down by politics any longer.”