In East Room ceremony, President Obama signs job-creating bill championed by Cantwell; budget-neutral measure will help get hundreds of thousands of Americans back to work
Today, U.S. Senator Maria Cantwell (D-WA) hailed the signing of the Small Business Jobs Act, a measure that will help small businesses create and preserve hundreds of thousands of jobs through tax incentives and expanded private-sector lending. Cantwell, who played a leading role in authoring and championing the legislation, joined colleagues and Joe Fugere, owner of Seattle-based Tutta Bella Neapolitan Pizzeria, in the White House East Room as President Obama signed the Act into law. The Senate passed the bill on September 16, 2010, in a 61-38 vote. The House sent the bill to the President last Thursday in a 237-187 vote.
"This recession began on Wall Street, but only Main Street can end it," Senator Cantwell said. "This new law will provide small businesses with greatly expanded opportunities to do what they do best -- create jobs and grow our economy. Freeing up access to the capital is the key ingredient our small businesses need to start investing, growing, and hiring again."
Cantwell, a member of the Senate Small Business and Finance Committees, helped overcome a months-long Republican filibuster of the bill. She was the leading Senate advocate of a new Small Business Lending Fund (SBLF) in the legislation. First proposed by the President in his State of the Union Address, the Lending Fund will leverage a $30 billion public investment into $300 billion in private-sector lending to credit-worthy small businesses through sound community banks. The Congressional Budget Office says the Fund will actually reduce the federal deficit by $1.1 billion over ten years as banks repay the investment. Its creation responds to the seizure of credit markets caused by the Wall Street meltdown that prevented even thriving businesses from accessing capital. Treasury Department Counselor Gene Sperling said at a September press conference that Cantwell was instrumental in winning passage of the lending fund: "Nobody pushed us harder to understand the connection between small banks and small business more than Maria Cantwell throughout." Cantwell today urged Treasury to get funds flowing to sound community banks immediately.
"Community bankers and small business owners in Washington state have told me they stand ready to take advantage of the programs in this bill," Senator Cantwell said. "It is vitally important that the Department of Treasury move quickly to set up the Lending Fund to get funds flowing to the banks and businesses who know how to grow our economy and put America back to work. With swift action, we will go a long way toward repairing the damage done to Main Street by the meltdown on Wall Street."
The Small Business Jobs Act, through immediate tax relief for small businesses, will reduce the cost of investment and growth, and support our economic recovery. The tax provisions of the new law will improve liquidity, encourage investment, and promote entrepreneurship for small businesses. In total, the bill will deliver more than $55 billion in tax relief to businesses this year and next. The investment incentives in this bill -- providing immediate tax write-offs for businesses who make capital investments -- will deliver targeted tax relief to business owners who invest in equipment or expand or renovate their businesses. Among other provisions important to Washington state, Cantwell led the effort to include measures for small business export and trade promotion and a measure to aid small business government subcontractors.
The following is a breakdown of the key provisions in the new law that will help small businesses access capital and make investments to grow their businesses and create jobs:
Helping Small Businesses Access Capital
* The Small Business Lending fund establishes a lending program administered by the Department of Treasury for healthy community banks with under $10 billion in assets. Banks would repay at a dividend rate that would decrease as their lending to small businesses increases. The Independent Community Bankers of America estimates that the $30 billion program would generate $300 billion in small business lending.
* The legislation raises the cap on Small Business Administration (SBA) loans to increase lending by $5 billion in the first year after enactment, and refinances commercial real estate debt into long-term, fixed-rate loans. These provisions are expected to be budget neutral and could create or save 200,000 jobs, according to the Senate Small Business and Finance Committees.
* The legislation extends the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA 7(a) and 504 loan programs and increases the government guarantees on 7(a) loans from 75 percent to 90 percent. Since its creation, the program has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs.
* Allows the SBA to waive or reduce the non-federal share of Women's Business Centers or Microloan Intermediary funding requirement for up to one year from fiscal year 2012. SBA estimates the microloan program will create or save more than 10,000 jobs in fiscal year 2011.
* Reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax (AMT), freeing up capital for expansion and job growth.
Increasing Small Businesses' Ability to Make Investments
* Increases Section 179 expensing -- permitting up to $500,000 in capital investments that businesses can deduct immediately off of this year's taxes.
* Extends Bonus Depreciation -- allowing taxpayers to immediately write off 50 percent of the cost of new equipment.
* $12 billion in tax cuts, including 100 percent exclusion from capital gains taxes on small business investments. A number of the small business tax cuts take effect today.
* A small business trade promotion provision that leverages more than $1 billion in export capital for small businesses, creating or saving as many as 50,000 jobs across the nation in 2010.
* Increases to $10,000 the tax deduction for start-up expenditures -- doubling the current levels.
* Establishes a new State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export goods to other countries.
Promoting Fairness in Competition
* Increases tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.
* Improves small business contracting by clarifying that no single contracting program receives priority over another program when competing for federal contracts.
* Measures to aid small business government subcontractors. The bill establishes stricter federal contracting bundling requirements, ensures prompt payment of subcontractors, requires an aggressive review of SBA size standards every five years, and allows small businesses to team together to compete for large contracts. Increasing contracts to small businesses by 1 percent would create or save more than 100,000 jobs.
* Allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.
Small businesses have been the hardest hit by the recession, reporting difficulty accessing lending capital to grow and hire. Approximately 81 percent of all jobs lost since the start of the recession have been from small businesses. There are 27 million small businesses in America, with 50 percent of working Americans either owning or working for a small business. In Washington state, there are more than 140,000 small businesses that have employees. Since the beginning of the recession in fall 2008, Washington state has lost some 142,000 jobs -- job loss that would be wiped out if each of those small businesses were to hire just one more employee.
A detailed summary of provisions included in the Small Business Jobs Act can be found on the Finance Committee website.