Obama to sign small-business legislation into law
Small-business legislation that President Barack Obama plans to sign into law Monday may be the final pre-election measure enacted by Congress to show its commitment to reviving the economy.
The legislation passed the House 237-187 on a mostly party-line vote Thursday after clearing the Senate last week.
It provides new tax breaks to small businesses, increases Small Business Administration lending limits, waives SBA loans fees and provides banks with $30 billion in new capital to increase lending to small businesses.
Republicans criticized that lending fund as “TARP Jr.,” a reference to the Troubled Asset Relied Program initiated by the Bush administration in 2008 to help failing financial institutions and keep credit markets from drying up.
Glenn Sutherland, president of Catskill Hudson Bancorp, which operates in the Hudson Valley, said his community bank plans to apply for the new capital and leverage it to provide up to $30 million in new small-business lending.
But Sutherland doubts there will be immediate demand for that amount in loans, given the current economic conditions.
“At the present time, it is relatively quiet,” he said. “I think it’s going to be 12 to 18 months.”
Sutherland’s bank also received TARP money and can use the new federal capital to repay that loan.
Thirteen House Democrats, including Rep. Nydia Velazquez of Brooklyn, chairwoman of the House Small Business Committee, voted against the bill.
Velazquez cited the absence of a requirement to use money in the $30 billion loan fund for small-business lending.
Republican Rep. Chris Lee of the Buffalo suburb of Clarence, who joined most Republicans in opposing the bill, voiced a similar concern.
“It gives banks access to capital but it doesn’t force them to lend,” Lee said. “It’s a hard thing for me because there are some programs in there that I supported.”
Small-business groups support the legislation, but it hasn’t been their legislative priority.
“Certainly, the lowering of tax burdens and the creation of ways to get capital are important to small-business owners,” New York State Business Council spokesman Michael Moran said.
Mike Elmendorf, New York director of the National Federation of Independent Business, said the tax breaks in the bill “will help some small businesses.” He said the biggest problems facing small businesses are lack of sales, a weak economy and uncertainty.
“By that we mean they don’t what’s going to happen with the tax rates that are going to expire,” Elmendorf said.
Moran said his group’s members also want to know what their burden will be next year when the Bush-era tax cuts expire, and they’re concerned about the cost of implementing the new health care reform law.
Senate Democrats announced Thursday they won’t vote on the tax cuts until after the November election.
That leaves high-income small-business owners uncertain whether the top rate for individuals will remain at 35% or return to the 39.6% rate that existed during the Clinton administration.
Obama favors allowing the Bush tax cuts to expire for individuals making more than $200,000 and couples making more than $250,000.
Sen. Chuck Schumer, D-N.Y., promised a Senate vote next week on a measure that would create a tax break for companies that bring manufacturing jobs back to the United States from overseas. The bill also would prohibit U.S. firms from deferring overseas income until it is repatriated back to the United States.
Small businesses should be happy that the write-offs in the legislation the president will sign into law Monday could be used to offset any tax increase that takes effect next year.
For example, equipment purchases of up to $500,000 will be deductible for this year and in 2011.
And certain small-business owners will be allowed to use various business expenses to offset the Alternative Minimum Tax.
Source: AP