Top 14 benefits of the Small Biz Jobs Act

The new small business lending bill “Small Business Jobs Act of 2010” shows the federal government got the message: Most job growth is caused by small businesses. The small-business bill provides $12 billion in tax incentives and provides a $30 billion lending fund to help cash-starved businesses. This Act is expected to leverage a total of $300 billion in loans to small businesses.

I read the whole bill so you don’t have to. Here’s the highlights:

The Benefits:

 Aids lending by lowering Small Business Administration loan program fees.
 Significantly raises loan guarantees, loan caps and lending limits under the SBA.
 Gives an extension of a plan from the stimulus law, which increases government guarantees on SBA loans, which will help create and/or retain jobs.
 Allows the expensing of up to $500,000 in capital investments.
 Allows the write off of 50% of the cost of new equipment and 100 percent exclusion from capital gains taxes on small business investments.
 Helps small businesses cope with the credit crunch that worsened after the financial crisis two years ago – helps right the Wall Street wrong and put capital back into Main Street.
 Reduced paperwork – saves time and aggravation applying for small business financing.
 Increases the tax deduction for trade or business start-up expenditures from $5,000 to $20,000 in 2010 and 2011.
 The small business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones – will stimulate expansion and jobs.
 The new loan fund would be available to community banks with more than $1 billion and less than $10 billion in assets to encourage lending to small businesses, and supporters say banks should be able to use the fund to leverage up to $300 billion in loans.
 An eligible bank can apply for up to 3% of its assets (with caveats), so a $1B bank can get $30 million and a $10B bank can get $300M.
 Releases banks that are holding on to their capital waiting for this law to pass.
 Small business owners/self-employed can deduct the costs of health insurance for themselves and their families from self-employment taxes, for the purpose of paying their self-employment tax, but only for the 2010 tax year.
 Larger businesses could more quickly recover the costs of capital improvements through depreciation.

The Challenges:

 Could encourage banks to make loans to borrowers who aren’t good credit risks.

 Near term, the bulk of the tax cuts would actually go to bigger companies that spend on capital expenditures to allow them to more quickly recover the costs of capital improvements through depreciation.

 More debt for our country.

 A 1099 for every product or service purchased over $600 – major administrative/tax headache to track this, starting in 2012. A bill introduced yesterday by Senate Small Business Chairwoman Landreiu (D-La.) would raise the requirement to $5,000, but is failing in today’s votes. There’s still time to fix this one.

 Small banks could hold onto the money and not lend, as it boils down to incentives for these banks to loan to small business. No guarantees.

What does the government defines as a small business? It’s determined by Title 13, Code of Federal Regulations, part 121 (13 CFR §121). Size standards have been established by industry and economic activity under the North American Industry Classification System (NAICS). They use revenue or number of employees to determine if you’re a small business. Every NAICS code has a small business size. See the Table of Small Business Size Standards here.

How is this bill getting paid for? Mostly by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire.

When small businesses have access to more capital, they build better products, market them better, make them available to more people, and hire more people to product them. This results in reduced unemployment and puts the money to work in our neighborhoods, right where it should. Employees are consumers and will spend more on the goods and services they need and want. It will take a little while, but I believe this will help the USA move past a jobless recovery and help keep the jobs here in America.

If your small business needs access to financing, give us a call.
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Marty Koenig is Founder and CEO of CxO To Go LLC and Dean of the University of Entrepreneur for Angel Capital Summit. He loves what he does for a living, because he gets to work with so many great, world-changing people and help them succeed in their business. His team is dedicated to building financial, operational, strategic, and technological excellence for small/mid size business owners. Marty has over 29 years of diversified experience in private and public companies, from startups and mid-size firms to multinational Fortune 30 companies including AT&T, General Electric, NCR Corporation and StorageTek. He can be reached at 888.745.8516 or