With an estimated cost of $ 7 billion over 10 years, Congress has passed a package of small business stimulus measures. This should increase tax cuts, spur lending, and provide new equity financing. This bill is in response to the increasing costs of beginning a business, and will be overseen by all of the Treasury’s inspector general.
Article Source: Small Businesses to qualify for new small loans
Small business bill cuts taxes
The small business bill is a combined bill that closes a whole bunch of tax loopholes and renews tax cuts for small businesses. There would be $ 3.6 billion in tax breaks for small businesses to be implemented over the next decade. The tax breaks could be paid for by increases in tax for large businesses. Small businesses would also be able to deduct startup expenses from their taxes. This provision of the bill began as a separate measure in Congress, but is being combined as it is sent to the Senate.
Additional money to flow to small businesses
The small business lending bill probably could create 3 major avenues for small businesses to get money. First, there would be a $ 30 billion fund of “preferred stock” that banks would be allowed to tap based on their lending to farms and small businesses. There would also be $ 2 billion given to states to help increase state-funded loans to small businesses. Third, the Small Business Administration would be authorized to match $ 1 billion of private investment in startups.
Paying somehow for the small business bill
In order to pay for the estimated $ 7 billion cost of the small business loans bill, the government will be increasing some taxes. Specifically, tax breaks for Grantor-Retained Annuity Trusts — trusts set up to keep away from taxes on gifts — will be rescinded. Taxes on the sale of some stock would be increased to the point of standard income taxes as opposed to capital gains taxes.
The voting on the small business bill
The small business bill passed because of a 241-182 vote. The bill is combined with the $ 3.6 billion tax-cut bill for small businesses and will go to the Senate. The Senate is expected to pass the bill. Some Senate Republicans are arguing that this bill is really “another bank bailout” in disguise as a small business stimulus package. Democrats counter that the bill takes a balanced approach to traditional and non-traditional lending for all of the new businesses.