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Bill to Create $30 Billion Fund for Small Business Lending Advances in Senate

The Senate has cleared the way for a bill that aims to help out small business owners. The Small Business Jobs and Credit Act of...
September 21, 2010

The Senate has cleared the way for a bill that aims to help out small business owners. The Small Business Jobs and Credit Act of 2010 (H.R. 5297) will create a $30 billion fund to provide small banks access to funds earmarked for small business lending. Senators voted 61-37 in favor of a cloture motion to limit on debate on the bill, which will allow it to pass by a simple majority when it comes up this week. Two Republicans, Sens. George Voinovich (R-Ohio) and George LeMieux (R-Fla.) joined Democrats and independents to break a GOP filibuster. The bill has already passed in the House.

According to proponents of the bill, the capital along with government guarantees will help the ease the credit crunch for small businesses and could leverage up to $300 billion in additional lending. Also included in the bill are roughly $12 billion in tax breaks and incentives, including more generous write-offs for equipment purchases. The new lending program would be reserved for banks with less than $10 billion in assets.

To help new businesses raise capital, the bill allows the stock of incorporated businesses to be exempt from capital gains taxes if bought at the initial issuance, provided it is held for five years. Deduction limits for start-up costs are increased to $10,000 from $5,000, a move intended to increase cash flow and promote hiring. In addition, loan limits by the Small Business Administration jump from $2 million to $5 million and $1.5 billion is allocated to support state small business credit initiatives.

"Passing the Small Business Jobs and Credit Act is just the first step toward helping our nation's small business owners during these difficult economic times," said Susan Eckerly, senior vice president of the National Federation of Independent Business. "While the bill passed today will help some small businesses that either qualify for the specified tax breaks or qualify for new loans, it falls short of addressing the most significant problems facing all small business owners - lack of sales and uncertainty."

Click here to read Small Business Can't Get Loans From Bailed-Out Banks (Bloomberg 9/16/10)