President Obama has signed into law a small business bill that was blocked for weeks by a Republican filibuster in the Senate. What does the new law do? This is part of the fact sheet that was sent out by the White House, detailing some of the aid plans.
The Small Business Jobs Bill Will
Provide Immediate Support for Small Businesses:
bill immediately extends successful SBA Recovery Act provisions, meaning
that within a few days, it will restart the SBA’s Recovery lending, beginning
with the more than1,300 small businesses that have been waiting to get the credit
they need – with thousands more benefitting in the coming weeks.
the bill includes eight new small business tax cuts – all effective
as of Monday, and applying to small businesses’ taxes for this year –
providing an immediate incentive for businesses to make new investments and
Â· if you are a small
business and you buy new equipment, you can immediately write off the first
$500,000 of your investments;
Â· if you are one of
over one million eligible small businesses, key long-term investments in your
company will be subject to zero capital gains taxes;
Â· if you are an
entrepreneur and take a chance on a new idea, you can deduct the first $10,000
of your start-up costs;
Â· and if you are self
employed you can deduct 100 percent of the cost of health insurance for you and
your family from your self-employment taxes.
Eight Small Business Tax Cuts – Effective Today, Providing Immediate
Incentives to Invest: The President had already signed into law
eight small business tax cuts, and on Monday, he is signing into law another
eight new tax cuts that go into effect immediately.
1. Zero Taxes on
Capital Gains from Key Small Business Investments: Under the Recovery
Act, 75 percent of capital gains on key small business investments this year
were excluded from taxes. The Small Business Jobs Act temporarily puts in place
for the rest of 2010 a provision called for by the President – elimination of
all capital gains taxes on these investments if held for five years. Over
one million small businesses are eligible to receive investments this year
that, if held for five years or longer, could be completely excluded from any
capital gains taxation.
2. Extension and
Expansion of Small Businesses’ Ability to Immediately Expense Capital
Investments: The bill increases for 2010 and 2011 the amount of
investments that businesses would be eligible to immediately
write off to $500,000, while raising the level of investments at which the
write-off phases out to $2 million. Prior to the passage of the bill, the
expensing limit would have been $250,000 this year, and only $25,000 next
year. This provision means that 4.5 million small businesses and
individuals will be able to make new business investments today and know
that they will earn a larger break on their taxes for this year.
Extension of 50% Bonus Depreciation: The bill extends –
as the President proposed in his budget – a Recovery Act provision for 50
percent “bonus depreciation” through 2010, providing 2 million
businesses, large and small, with the ability to make new investments
today and know they can receive a tax cut for this year by
accelerating the rate at which they deduct capital expenditures.
A New Deduction of Health Insurance Costs for Self-Employed: The bill allows 2
million self-employed to know that on their taxes for this year, they
can get a deduction for the cost of health insurance for themselves and
their family members in calculating their self-employment taxes. This provision
is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
Tax Relief and Simplification for Cell Phone Deductions: The bill changes
rules so that the use of cell phones can be deducted without burdensome extra
documentation – making it easier for virtually every small business in
America to receive deductions that they are entitled to, beginning on their
taxes for this year.
An Increase in the Deduction for Entrepreneurs’ Start-Up
Expenses: The bill temporarily increases the amount of start-up
expenditures entrepreneurs can deduct from their taxes
for this year from $5,000 to $10,000 (with a phase-out
threshold of $60,000 in expenditures), offering an immediate incentive for
someone with a new business idea to invest in starting up a new small business
A Five-Year Carryback Of General
Business Credits: The bill would
allow certain small businesses to “carry back” their general business credits
to offset five years of taxes – providing them with a break on their
taxes for this year – while also allowing these credits to offset the
Alternative Minimum Tax, reducing taxes for these small businesses.
Limitations on Penalties for Errors in
Tax Reporting That Disproportionately Affect Small Business: The bill would change, beginning
this year, the penalty for failing to report certain tax transactions
from a fixed dollar amount – which was criticized for imposing a
disproportionately large penalty on small businesses in certain circumstances –
to a percentage of the tax benefits from the transaction.
Extension of Successful SBA Recovery Loan Provisions– Immediately
Supporting Loans to Over 1,300 Small Businesses : With funds provided in the bill,
SBA will begin funding new Recovery loans within a few days of the
President’s signature, starting with the more than 1,300 businesses – with
loans totaling more than $680 million – that are waiting in the Recovery Loan
In Total, Extension of Provisions Which Have the Capacity to
Support $14 Billion in Loans to Small Businesses: Extending these
Recovery loan enhancements – which increase guarantees for SBA’s largest loan
program (the 7(a) program) to 90% and reduce fees for the 7(a) and 504 program
– has the capacity to support $14 billion in lending to small businesses.
Already, SBA Recovery loan provisions have supported $30 billion in lending to
over 70,000 small businesses.
Within Coming Weeks, the Bill Will Allow SBA to Support
Larger Loans As Well: The bill also increases the maximum loan size for SBA loan
programs, which in the coming weeks will allow more small businesses to access
more credit to enable them to expand and create new jobs. The bill:
Permanently raises the maximum loan size for the SBA’s two
largest loan programs, increasing maximum 7(a) and 504 loan size from $2 million
to $5 million and the maximum 504 manufacturing related loan size from $4
million to $5.5 million.
Permanently raises the maximum loan size for SBA microloans, increasing it from
$35,000 to $50,000 and strengthening a critical tool for entrepreneurs and
business owners in underserved markets to access start-up capital.
Temporarily raises the maximum loan size for SBA Express
loans from $350,000 to $1 million, providing greater access to working capital loans that small
businesses use to purchase new inventory and take on their next order –
allowing them to create new jobs.
Treasury Is Working to Quickly Implement the Small Business
Lending Fund and State Small Business Credit Initiative: In addition
to these SBA provisions, Treasury is working to quickly implement two new
programs designed to support private-sector lending to credit-worthy small
businesses, and expects to release further details in the coming weeks
concerning applications for these programs.
The Small Business Lending Fund would make available
$30 billion in capital to small banks with incentives to increase small
business lending, potentially supporting several multiples of that amount in
The State Small Business Credit Initiative will
support at least $15 billion in new lending by strengthening state small
business programs – many of them facing budget cuts – that leverage
private-sector lenders to extend additional credit.