President Barack Obama recently signed into law the Small Business Jobs Act, the most significant piece of small business legislation in more than a decade. The law provides entrepreneurs and small business owners with greater access to capital and more tax relief so they can grow their operations and create the jobs America needs.
First, too many small businesses still have trouble finding credit. Already, enhancements first made under the American Recovery and Reinvestment Act to U.S. Small Business Administration (SBA) loan programs — fee waivers for borrowers and increased guarantees for our lending partners — dramatically increased SBA loan volume at a time when credit was frozen. The provisions of the federal stimulus legislation turned just $680 million in taxpayer dollars into nearly $30 billion in lending support to nearly 70,000 small businesses. The recently enacted Jobs Act extends those two successful enhancements and will support an estimated $14 billion in loans to small businesses.
The law also permanently increases the maximum size of the top two SBA loan guarantee programs — the 7 (a) and 504 — from $2 million to $5 million, while increasing our microloans from $35,000 to $50,000. And, on a temporary basis, the law will increase the maximum size of our quick-turnaround Express loans to $1 million and also allow some small businesses to refinance their commercial real estate into our 504 program.
Furthermore, a new Small Business Lending Fund administered by the Treasury Department will provide community banks with the capital they need — up to $30 billion overall — to increase lending to small businesses beyond their 2009 levels.
The second overall benefit for small businesses in the Jobs Act is eight new tax cuts totaling $12 billion.
The tax cuts include: higher deductions for investing in new machines and equipment, zero capital gains for those who buy and hold small business stocks for five years and a doubling of the maximum deduction for startups to $10,000. The tax cuts also allow self-employed Americans to completely deduct health insurance costs for themselves and their families.
Beyond the increased access to capital and tax relief, the Jobs Act offers a number of additional benefits in key areas that help catalyze small business growth.
For example, the Jobs Act provides a better playing field for small businesses interested in contracting with the federal government. The law gives agency procurement officers more ability to provide contracts to small business while also making it harder for agencies to engage in contract “bundling” — a practice that often takes opportunities away from small firms.
Recognizing that 96 percent of the world’s consumers live outside the United States, the Jobs Act provides more tools to help small businesses tap into export markets. The law increases the maximum size of SBA export loans and expands the counseling resources available to small businesses wanting to start or grow their exports.
For more information about the new Small Business Jobs Act, go to www.sba.gov/jobsact or contact the Colorado District SBA Office at (303) 844-2607.
At the SBA, we’re working hard to put these new tools and resources into the hands of America’s small businesses so they can grow, create jobs and continue to lead our economic recovery.
Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him by e-mail at Daniel.Hannaher@sba.gov