Within the past couple months, Washington has responded. With time
running short on small business tax deductions, and the Small Business Administration needing additional funding for loans, the mood was darker than
predicted for the arena of small business.
One main reason that small business is entirely central to the United States economy is the relative size of their labor force; small businesses employ
a large percentage of the private sector employment market; 23 million self-employed workers, who contribute nearly $1 trillion dollars to the United
States economy. Certain political figureheads have stated numerous times that small business will be the harbinger of economical change in the United
States.
Although that particular topic is up for debate, one idea does ring true. It is essential for the core foundation to remain the same; tax deductions
and small business loans are the backbone of government support and economical motivation.
The current chair of the Senate Committee on Small Business and Entrepreneurship believes in this idea. Senator Mary Landrieu has helped, with other
political representatives, to champion legislation in Washington that promotes the foundation of small business.
One such act entitled "The Small Business Jobs Act of 2010" (H.R. 5297) will include tax deductions
for small businesses, which deal with the health insurance costs of the self-employed. The act will also bring with it an increase in the expense
deductions for small business. With a revision of Section 179, there also comes increases to SBA loan limits, and a new fund called the "Small Business
Lending Fund."
The changes are positive indicators that Washington is listening to the needs of small business. By increasing the avenues of funding, and extending
tax deductions, it is an effort at keeping the motivation strong for the growth of small business in the United States.
These changes were not the only ones being presented. Senator Barbara Boxer has also championed an amendment to the Small Business Jobs Act. Her change
is simple. The home office deduction was often complicated and included additional red tape. She wants just a standard deduction in its place, which
cuts the "middle man" out of the equation; making it easier for small businesses to claim a home office deduction.
Amendments for H.R. 5297 include numerous revisions so far; up to 76 total.
Further Information on the TARP legislation in H.R. 5297
Title I
of the TARP legislation, which is sponsored by Rep. Frank, Barney (D-MA), would create a $30 billion
dollar small business lending fund. It would allow, or authorize, the Treasury Secretary to make capital investments in banks, which have less than $10
billion dollars in assets. It is further elaborated in Title I that the overall goal would be to provide incentives for institutions to lend to small
businesses, but not require it.
Title II
of the TARP legislation creates the Small Business Credit Initiative Program, with the appropriation of $2 billion dollars to help states with capital
flow to small businesses, by private lenders. The Department of the Treasury is administrating this, and the Secretary would be required to apportion
the participating stated allocated amounts, in the sum of one-thirds.
Title III
of the TARP legislation establishes the Small Business Administration (SBA) grant program. This is intended for venture capital funds to invest in
early-stage small businesses in targeted industries. These include manufacturing, energy, agriculture, IT, digital media, and defense. The
bill authorizes a total of $1 billion dollars for the program, and grants could not exceed $100 million dollars for any company.
TARP Pros
-
Establishes a new grant program
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Availability of further tax deductions
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Helps capital flow to small businesses
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Increase of credit available to small businesses
TARP Cons
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Deepens nation's debt
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Another bailout program
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No long-term incentives to create jobs
Estimated total cost of $3.3 billion dollars, but potentially offset with a merge of revenue-raising propositions in H.R. 5297.