Small Business Jobs Act Unveiled in Senate

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.) have released the Small Business Jobs Act, a bill to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship – all of which will help small business create jobs.

The Small Business Jobs Act will:

Help Small Businesses Access Capital

- The legislation encourages investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years.  This policy helps small business owners access more private capital to finance an expansion and hire new workers.

- The legislation reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years.  Small businesses will also be able to count the general business credits against the Alternative Minimum Tax (AMT), freeing up capital for expansion and job growth.

- The legislation establishes a Small Business Lending Fund of $30 billion to provide capital investments to small community banks to increase small business lending. The fund is limited to only the smallest banks, those who hold less than $10 billion in assets, and the performance-based program would incentivize only those lenders that extend new credit by decreasing the dividend rate banks pay as they increase lending.

- The legislation establishes the State Small Business Credit Initiative to provide $900 million in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.

- The legislation raises the cap on small business loans to increase lending by $5 billion in the first year after enactment, and refinances commercial real estate debt into long-term, fixed-rate loans, provisions that are expected to be budget neutral and could create or save 200,000 jobs.

- Building on successful initiatives we put in place through the Recovery Act, by making simple and cost-effective changes to the SBA’s two largest lending programs and to its microloan program, we were able to pump more than $20 billion into more than 40,000 businesses in our economy.  This legislation calls for an extension of these lending provisions through December 31, 2010.

Increase Small Businesses’ Ability to Make Investments

- The legislation allows taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made.  The legislation also expands the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements.  When small businesses are able to deduct the cost of purchases more quickly, they have more cash on hand to create jobs.

Promote Entrepreneurship

- The legislation doubles the amount of start-up expenditures that may be deducted by someone starting a small business, making it easier for new businesses to open.

- The legislation authorizes increased resources to support the Office of the United States Trade Representative’s small business export promotion and trade enforcement activities.  These efforts help U.S. small business exports grow in foreign markets and ensure small businesses compete on a level playing field.

- The legislation allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.

- The legislation improves the Small Business Administration’s (SBA) trade and export finance programs, elevates the Office of International Trade within the SBA and adds export finance specialists to the SBA’s counseling programs.

- The legislation establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export.

- The legislation allows the SBA to waive or reduce the state-matching share of its funding requirement for up to one year to continue providing technical assistance to underserved communities to start and grow small businesses.

Promote Equity

- The legislation promotes tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.

- The legislation removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations, instead of Main Street businesses.

- The legislation makes clear that no single contracting program receives priority over another program when competing for federal contracts.

The legislation is fully paid for, closes unintended tax loopholes and reduces the tax gap.

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