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Government &
Public Affairs Team
Larry F. Ayres
R. Daniel Beattie
Andrew C. Richner
Charles R. Spies
Reginald M. Turner
John
Van Fossen, Practice Group Leader
Lucius A. Vassar
Bret S. Wacker
Chris Wagner
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President
Signs Bill
Yesterday, the President signed H.R. 5297, the Small
Business Jobs and Credit Act of 2010, the only major piece of
legislation to reach the President's desk since Congress returned
from its August recess, and before it recesses again this week until
after the mid-term elections.
According to the Administration, small businesses are going to start
benefiting from this legislation from day one. The White House
provided a summary of the bill, which includes:
- Extension of
Successful SBA Recovery Loan Provisions - Immediately Supporting
Loans to Over 1,400 Small Businesses: With funds provided in the
bill, SBA will begin funding new Recovery loans within a few
days of the President's signature, starting with the more than
1,400 businesses - with loans totaling more than $730 million -
that are waiting in the Recovery Loan Queue. In total, the
extension of these provisions provides the capacity to support
$14 billion in loans to small businesses. The SBA Recovery
loan provisions have already supported $30 billion in lending to
over 70,000 small business.
- A More Than Doubling
of the Maximum Loan Size for The Largest SBA Programs: The bill
also increases the maximum loan size for SBA loan programs,
which in the coming weeks will allow more small businesses to
access more credit to allow them to expand and create new jobs.
The bill will permanently raise the maximum size for SBA's two
largest loan programs, increasing the maximum 7(a) and 504 loans
from $2 million to $5 million, and the maximum 504 manufacturing
related loan from $4 million to $5.5 million. In addition,
it will temporarily increase the maximum loan size for SBA
Express loans from $350,000 to $1 million, providing greater
access to working capital loans that small businesses use to
purchase new inventory and take on their next order - allowing
them to create new jobs.
- A New $30 Billion
Small Business Lending Fund: The bill would establish a new $30
billion Small Business Lending Fund which - by providing capital
to small banks with incentives to increase small business
lending - could support several multiples of that amount in new
credit.
- An Initiative to
Strengthen Innovative State Small Business Programs - Supporting
Over $15 Billion in Lending: The bill will support at least $15 billion
in small business lending through a new State Small Business
Credit Initiative, strengthening state small business programs
that leverage private-sector lenders to extend additional credit
- many of which have been forced to cut back due to budget cuts.
- Eight New Small
Business Tax Cuts - Effective Today, Providing Immediate
Incentives to Invest: The President had already signed into law
eight small business tax cuts, and on Monday, he is signing into
law another eight new tax cuts that go into effect immediately.
- Zero Taxes on
Capital Gains from Key Small Business Investments: Under the
Recovery Act, 75 percent of capital gains on key small business
investments this year were excluded from taxes. The Small
Business Jobs Act temporarily puts in place for the rest of
2010 a provision called for by the President - elimination of
all capital gains taxes on these investments if held for five
years. Over one million small businesses are eligible to
receive investments this year that, if held for five years or
longer, could be completely excluded from any capital gains
taxation.
- Extension and
Expansion of Small Businesses' Ability to Immediately Expense
Capital Investments: The bill increases for 2010 and 2011 the
amount of investments that businesses would be eligible toimmediately write off to $500,000, while
raising the level of investments at which the write-off phases
out to $2 million. Prior to the passage of the bill, the
expensing limit would have been $250,000 this year, and only
$25,000 next year. This provision means that 4.5 million
small businesses and individuals will be able to make new
business investments today and know that they will earn a
larger break on their taxes for this year.
- Extension of 50%
Bonus Depreciation: The bill extends - as the President
proposed in his budget - a Recovery Act provision for 50
percent "bonus depreciation" through 2010, providing
2 million businesses, large and small, with the ability to make
new investmentstoday and know they
can receive a tax cut for this year by accelerating the rate at
which they deduct capital expenditures.
- A New Deduction of
Health Insurance Costs for Self-Employed: The bill allows 2
million self-employed to know that on their taxes for this
year, they can get a deduction for the cost of health insurance
for themselves and their family members in calculating their
self-employment taxes. This provision is estimated to provide
over $1.9 billion in tax cuts for these entrepreneurs.
- Tax Relief and
Simplification for Cell Phone Deductions: The bill changes
rules so that the use of cell phones can be deducted without
burdensome extra documentation - making it easier for virtually
every small business in America to receive deductions that they
are entitled to, beginning on their taxes for this year.
- An Increase in the
Deduction for Entrepreneurs' Start-Up Expenses: The bill
temporarily increases the amount of start-up expenditures
entrepreneurs can deductfrom their taxesfor this year from $5,000 to $10,000
(with a phase-out threshold of $60,000 in expenditures),
offering an immediate incentive for someone with a new business
idea to invest in starting up a new small business today.
- A Five-Year Carryback Of General Business Credits: The
bill would allow certain small businesses to "carry
back" their general business credits to offset five years
of taxes - providing them with a break on their taxes for this
year - while also allowing these credits to offset the
Alternative Minimum Tax, reducing taxes for these small
businesses.
- Limitations on
Penalties for Errors in Tax Reporting That Disproportionately
Affect Small Business: The bill would change, beginning this
year, the penalty for failing to report certain tax
transactions from a fixed dollar amount - which was criticized
for imposing a disproportionately large penalty on small
businesses in certain circumstances - to a percentage of the
tax benefits from the transaction.
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If you have any questions concerning these issues,
please contact Chris Wagner at 202.772.0924 or cwagner@clarkhill.com.
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To find out
more about Clark Hill and our Government & Public Affairs
Practice Group, visit clarkhill.com
or call 800.949.3124
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