Obama’s New Small Business Proposals
February 8, 2010 by Chris DeGroff · 2 Comments
As small businesses struggle to survive in the current recession, it is no wonder that the government is looking for ways to help strengthen them. According to the U.S. Small Business Association (SBA), “small business is critical to our economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace.” In accordance with this idea, in a visit to Lanham, Maryland, President Obama announced two proposals that are designed to help strengthen many small businesses in our nation and, hopefully, help create more jobs.
According to a press release from the White House today, “The Administration is proposing legislation to temporarily allow for the refinancing of owner-occupied commercial real estate (CRE) loans under the SBA’s 504 program, which provides guarantees on loans for the development of real estate and other fixed assets.” President Obama has also proposed to increase the amount of money that the SBA can lend to small businesses through their Express loans from $350,000 to $1 million.
According to the President, these two proposals are part of a bigger plan which includes:
- Extending small business expensing and bonus depreciation for 2010. Eliminating capital gains taxes for small businesses in 2010.
- A Small Business Jobs and Wages Tax Credit that would cut taxes for more than 1 million small businesses by paying up to $5,000 for every net new job and covers payroll taxes on overall wage increases in excess of inflation.
- A proposal to transfer, through legislation, $30 billion to a new Small Business Lending Fund that will support lending by community and smaller banks.
- Additional SBA lending proposals, including an extension of the Recovery Act programs that eliminate fees and raise guarantees on SBA’s two largest loan programs and permanent increases in the maximum loan sizes for major SBA programs.
The administrator of the SBA, Karen Mills, said, “These proposals will provide us with two effective tools to help small businesses meet specific challenges brought on by the recession…Raising the limit on SBA Express loans to $1 million will mean more small business owners will have quicker access to this source of capital to help restock inventories and support larger revenue sales, and literally take that next step to grow their business and create new jobs…”
Mills also commented on the President’s proposal concerning the refinancing of commercial real estate loans and said, “the ability to refinance into SBA’s 504 loan will give them [small businesses] the chance to lock in long-term, stable financing, as well as protect jobs by protecting small businesses from foreclosure.”
While both reasons behind the President’s proposals are important (i.e. helping small businesses survive in the recession and creating new jobs), it will be interesting to see if they actually have the desired effect.
To view a video of Obama’s announcement, click here.
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Thanks for sharing this. I work for a nonprofit that studies the workplace effectiveness of small business, and many leaders of these firms in our network are expressing doubt that the $30B in new lending will make much of a dent — instead, they think it should be used (and the amount increased) to spur more consumer spending. Because if jobs are the goal, you have to have more consumers shopping and purchasing to necessitate adding bodies.