Congressman Jim Himes (CT-4) today voted for legislation today that will leverage $300 billion in lending for small businesses and create hundreds of thousands of jobs. The Small Business Jobs Act was approved by the House on a vote of 237 to 187. The legislation will create jobs through a combination of much-needed tax credits, enhancements to Small Business Administration (SBA) lending programs, and the development of new community bank lending facilities.
"Small businesses are the engines of economic growth and this bill provides vital support to the small businesses that can create jobs in these tough economic times," said Himes. "I've visited dozens of small businesses throughout my district and heard over and over again from owners who were looking to expand but couldn't access the funding they needed to grow. By providing access to credit and targeted tax incentives, this legislation will give small businesses the capital they need to invest in their companies, create jobs and help get our economy back on track."
Small businesses are a leading source of job creation in America, creating two-thirds of all new jobs over the last 15 years. Last year, almost half of the small businesses seeking loans were unable to meet their credit needs. To assist small business owners and their employees, The Small Business Jobs Act targets the unique needs of small businesses and community banks, giving them the tools they need to help sustain our economic recovery. The bill is fully paid for and contains the following provisions:
Help Small Businesses Access Capital
* The legislation establishes a Small Business Lending Fund of $30 billion to provide capital investments to small community banks to increase small business lending. The fund is limited to only the smallest banks, those who hold less than $10 billion in assets, and the performance-based program would incentivize only those lenders that extend new credit by decreasing the dividend rate banks pay as they increase lending.
* The legislation establishes the State Small Business Credit Initiative to provide $1.5 billion in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.
* The legislation raises the cap on small business 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, provisions that are expected to be budget neutral and could create or save 200,000 jobs.
* The legislation builds on successful initiatives put in place through the Recovery Act, namely simple and cost-effective changes to the Small Business Administration's (SBA) two largest lending programs and to its microloan program, which have pumped more than $20 billion into more than 40,000 businesses in our economy. This legislation calls for an extension of these lending provisions through December 31, 2010.
* 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 nearly $30 billion in small business lending, which has helped to create or retain over 700,000 jobs.
Increase Small Businesses' Ability to Make Investments
* The legislation allows taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made. The legislation also expands the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements. When small businesses are able to deduct the cost of purchases more quickly, they have more cash on hand to create jobs.
* The legislation encourages investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years. This policy helps small business owners access more private capital to finance an expansion and hire new workers.
* The legislation 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.
* The legislation doubles the amount of start-up expenditures that may be deducted by someone starting a small business, making it easier for new businesses to open.
* The legislation allows the SBA to waive or reduce the state-matching share of its funding requirement for up to one year to continue providing technical assistance to underserved communities to start and grow small businesses.
* The legislation allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.
Creates New Markets
* The legislation targets resources to support the Office of the United States Trade Representative's small business export promotion and trade enforcement activities. These efforts help U.S. small business exports grow in foreign markets and ensure small businesses compete on a level playing field.
* The legislation improves the Small Business Administration's (SBA) trade and export finance programs, elevates the Office of International Trade within the SBA and adds export finance specialists to the SBA's counseling programs.
* The legislation establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export goods to other countries.