The Small Business Jobs Act, signed by President Obama on September 27, 2010, will provide critical resources to help small businesses continue to drive economic recovery and create jobs. The new law extends the successful SBA Recovery loans while offering billions more in lending support and tax breaks for entrepreneurs and small business owners.
The New Law Puts More Capital in the Hands of Entrepreneurs and Small Business Owners:
Recovery Act Loans Extension — $14 billion more in lending support
The law will extend SBA Recovery loans (with the 90% guarantee and reduced fees) through December 31, 2010. The $505 million for Recovery loans in this new law will support about $14 billion in overall small business lending. More than 1,400 small businesses that have been in a queue waiting for this bill to become law will be funded in a matter of days.
Since passage of the Recovery Act, SBA has supported nearly 70,000 Recovery loans, turning $680 million in taxpayer dollars into more than $30 billion in lending support.
Higher Loan Limits — significantly increases maximum loan sizes in top loan programs
The law will permanently increase 7(a) and 504 limits from $2 million to $5 million (for manufacturers in 504 loan program, up to $5.5 million).
The law will permanently increase microloan limits from $35,000 to $50,000, helping larger entrepreneurs with start-up costs and small business owners in underserved communities.
Alternative Size Standards — more small businesses eligible to get SBA loans
The law expands the number of businesses eligible for SBA loans by increasing the alternate size standard to those small businesses with less than $15 million in net worth and $5 million in average net income.
Temporary Enhancements to Help with Working Capital, Commercial Real Estate Refinancing
The law will increase maximum amount of SBA Express loans from $350,000 to $1 million (expires 9/27/2011).
The law will allow some small businesses to refinance their owner-occupied commercial real estate mortgages into the 504 loan program (expires 9/27/2012).
Dealer Floor Plan Pilot Extension, Expansion
The pilot program (begun 2009) will be extended to 2013.
After the $5-million loan limit is implemented, this will help even more small businesses owners who sell cars, RVs, boats, other titleable inventory.
Small Business Intermediary Lending Pilot
The law provides for funding up to $20 million per year in small business loans over the next three years for an intermediary-facilitated loan program targeting small businesses that need loans up to $200,000.
The New Law Strengthens Small Businesses’ Ability to Compete for Contracts, Including Recommendations from the President’s Task Force on Federal Contracting Opportunities for Small Business:
Equal Treatment across Federal Contracting Programs
The law reaffirms “parity” among federal small business contracting programs. Contracting officers will be free to choose among businesses owned by women and service-disabled veterans, as well as those participating in HUBZone and 8(a) programs, and soon the women’s contracting program when conducting contracts that are set-aside for small business.
Better Playing Field for Small Businesses — more accountability, integrity, transparency
The law gives agency procurement officers more ability to provide both large prime contracts and mircocontracts to small businesses. The law makes it harder for agencies to “bundle” contracts, a practice that often takes opportunities away from small business. The law also has stronger enforcement so agencies will be held more accountable for reaching small business goals.
The law enforces stronger subcontracting plan requirements for large prime contractors to ensure small businesses are utilized in subcontracting. It also discourages late payments to small subcontractors.
The law enforces SBA’s continuing efforts to combat fraud, waste, and abuse. Federal agencies, including the Department of Justice, will have more ability to vigorously pursue companies that win contracts by misrepresenting their small business status.
Small Business Teaming Opportunities
The law provides $25 million for a new pilot that provides grants that will help small businesses team up with each other to compete for larger and more complex federal government contracts.
The New Law Promotes Small Business Exporting, Building on the President’s National Export Initiative:
Export Express Pilot Becomes Permanent
The law turns the Export Express pilot loan program into a permanent program with 90% guarantees for loans up to $350,000 and 75% for loans between $350,000 and $500,000.
State Trade and Export Promotion Grants Pilot
The law provides $90 million in competitive grants over next three years for states to help small business owners with exporting.
Increased Staff and Strengthened Export Counseling Resources.
The Law Expands Training and Counseling:
Major Investment in Counseling and Training
The law provides $50 million in grants available to Small Business Development Centers.
More Opportunities in Export Counseling (see above)
The New Law Provides $12 Billion in Tax Relief to Help Small Businesses Invest in their Firms, Create Jobs:
Extension, Expansion of Tax Cuts — 8 Tax Cuts
1. The highest small business expensing limit ever, of $500,000
2. Carry-back provisions on net operating losses of up to 5 years
3. Accelerated/bonus depreciation
4. Zero capital gains taxes for those who invest in small businesses
5. Increased deductions for start-ups
6. Deductions for employer-provided cell phones
7. Deductions for health insurance costs for the self-employed
8. Limitations on penalties for errors in tax reporting that disproportionately affect small business
Small Business Lending Fund — $30 billion (administered by Treasury)
The law will provide smaller community banks with low cost capital (as low as 1%) if they go above and beyond 2009 small business lending levels.
Establishes State Small Business Credit Initiative (administered by Treasury)
The law will provide up to $1.5 billion to States to support state run small business lending programs.