Small businesses will receive some assistance in newly enacted federal legislation that includes tax breaks as well as fee waivers for lending programs backed by the U.S. Small Business Administration.
The measure also establishes a $30 billion fund designed to help smaller banks make more loans to businesses.
The legislation constitutes a good start that’s likely to help those individual businesses that can take advantage of the tax cuts or want financing. At the very least, lawmakers momentarily diverted attention in the midst of an election year to small businesses, albeit disproportionate to a sector of the economy that creates most new jobs.
Unfortunately, the legislation hardly qualifies as a panacea, nor will it likely play a significant role in bolstering an economy that’s thankfully growing, but at a snail’s pace.
Along with more sales, what small businesses desperately need is a measure of certainty, some confidence, that conditions will improve.
Even those firms that survived the recession comparatively unscathed and now enjoy increasing business remain understandably reluctant to hire new employees to spell overworked staffs, much less expand operations. Consequently, well-intentioned efforts to increase access to financing for small businesses won’t make much of a difference until there’s substantially more demand for that financing.
It’s impossible, of course, to legislate economic certainty, no matter how much money lawmakers want to throw at that proposition. It’s entirely possible, though, to offer small businesses more certainty in terms of taxes and regulations. But Congress has yet to act in that regard.
Any decision about the fate of Bush-era tax cuts set to expire at the end of this year likely won’t be made until after the mid-term elections in November. By one estimate, more than a third of the revenue from a proposed increase in the top two federal income tax rates would come from business income.
Meanwhile, health care reforms enacted last year that are now taking effect seem to have created more uncertainty about the costs associated with health insurance, not less.
Speaking of regulation, it’s important to remember that federal regulations impose disproportionately higher compliance costs on small businesses than large firms — about 36 percent more when calculated on a per employee basis, according to the results of the latest study on the issue.
The newly enacted federal legislation can be justifiably praised as a step forward in helping small businesses and the economy. Here’s hoping the measure is every bit as successful as some proponents believe it could be in promoting the creation of 500,000 jobs.
But at the same time, there’s a long way yet to go.