Like vacations, childhood, and the last season of “Lost,” all good things really must come to an end and this includes many of the economic opportunities made available to small businesses through the American Recovery and Reinvestment Act (ARRA).
Signed in February 2009, the legislation was an effort to reinvigorate a flagging economy with new jobs and lay the groundwork for a more robust market in the future. To do so, the Recovery Act pumped $787 billion through 28 federal agencies – from the Department of Agriculture to the Smithsonian Institution to NASA – to disperse in the form of loans, grants, contracts, and tax savings to save and create jobs. It remains to be seen if Congress will renew any of the programs or pass the Small Business Jobs and Credit Act , which would make funds available for banks to loan to small businesses.
While much of the current funding has been exhausted, there still remains a range of loans and energy incentives as well as numerous tax savings that savvy small business owners can tap into to increase stability, growth and employee pool.
But like the longer days of summer, these last vestiges of the stimulus will be gone faster than you can say, “Wait, they were dead the whole time?”
Small businesses loans
The Small Business Administration (SBA) received an initial $730 million infusion through the ARRA in 2009 to help support small business lending, which was followed by an additional $305 million to continue these programs through the spring. While access to the lowered fees and higher guaranty levels for loans is no longer available through the SBA’s 7(a) and 504 programs, there remain two other loan options, according to Michael Stamler, director of the Press Office for the SBA.
The two loan programs still available are:
- Microloan Program
For small loans for business start ups or to upgrade technology for a growing enterprise, the SBA’s Microloan Program continues “unfettered,” said Stamler. The program provides small loans of under $500 and up to $35,000 for all entrepreneurs but especially supports undeserved markets: Borrowers with little to no credit history; low-income borrowers and women and minority entrepreneurs in rural and urban areas who generally do not qualify for conventional loans or other, larger SBA loans.
- America’s Recovery Capital Loan Program (ARC)
Available through the end of September, ARC loans offer struggling small businesses help making payments on existing loans by taking out deferred payment loans of up to $35,000 that are fully backed by the SBA. As of the end of July, the agency had approved 8,070 ARC loans totaling over $261.4 million to help viable small businesses make it through this tough economy.
Both loans can be applied for through banks, credit unions or other lending institutions. To apply, eligible businesses must be for-profit with fewer than 500 employees and demonstrate the need and an ability to repay the loan.
Although many of the tax benefits established by the Recovery Act are geared towards individuals, there are a number of credits that small businesses can claim.
- Work Opportunity Tax Credit (WOTC)
This expanded credit adds returning veterans and “disconnected youth” to the list of new hires that businesses may claim. WOTC provides a federal tax credit incentive of up to $9,000 to employers to promote the hiring of individuals who qualify as a member of a target group.
- COBRA: Health Insurance Continuation Subsidy
The Recovery Act established an employer-provided health insurance continuation subsidy for workers who involuntarily lost their jobs between December 1, 2009 and March 1, 2010. The subsidy has now been extended to May 31, 2010. The IRS has extensive guidance for employers to report their COBRA premium assistance payments.
- Net Operating Loss Carryback
Small businesses can offset losses by getting refunds on taxes paid up to five years ago. The Worker, Homeownership and Business Assistance Act of 2009 (WHBAA) expanded the five-year NOL carryback to most businesses.
- Energy Efficiency and Renewable Energy Incentives
From New Clean Renewable Energy Bonds to a Temporary Increase in Credit for Alternative Fuel Vehicle Refueling Property, businesses that make efforts toward becoming more environmentally friendly may qualify for a variety of tax incentives.
To help get small businesses pointed in the right direction, Stamler recommended that entrepreneurs contact their local Small Business Development Centers or Women’s Business Centers, which provide training and counseling for current and prospective small business owners, and are familiar with available programs.