President Obama’s 2016 budget proposal seems focused on helping middle-class families pay for education and get ahead financially. But it also offers up several measures specifically targeted at small businesses.
The president now has the challenge of convincing a Republican-controlled House and Senate to support his proposals. Some experts say that Republican leaders seem likely to back at least a couple of the president’s initiatives this time around, though it could be an uphill battle.
Here’s a look at some key budget proposals that would affect small businesses:
1. Permanently increasing Section 179 expensing limits
Small businesses have been left in a lurch the past couple years, waiting to see if Congress would keep renewing a higher $500,000 section 179 expensing limit, which it finally did retroactively for 2014 in December. President Obama’s budget proposal would make a $1 million section 179 expensing limit permanent, raising it significantly from its former permanent $25,000 level.
2. More federal spending
Perhaps the most broad sweeping of his proposals, the president called for a large increase in federal spending. More spending could help all types of small businesses, whether construction firms, research and development firms or government contractors. “Obama wants to spend money, and that could benefit thousands of small companies across the country,” writes Gene Marks in the Washington Post. “He’s proposing a $478 billion investment in infrastructure spending, and he wants to go 7 percent over previously agreed-upon sequestration caps to increase the defense budget by $38 billion.”
3. Higher start-up expense deductions
People who start businesses may be able to deduct more of their start-up costs. The proposal calls for raising the deduction limit of start-up expenses from today’s $5,000 to $20,000.
4. Streamlined accounting rules
Certain small businesses are currently required to use more-complex “accrual” accounting methods. Obama’s proposal would allow all businesses that generate up to $25 million in revenue to use the simpler cash-accounting method.
5. Merging the Small Business Administration with other agencies
The president’s plan calls for merging the SBA with other business-related federal agencies, including the Commerce Department, the Export-Import Bank, the U.S. Trade and Development Agency, and the U.S. Office of Trade Representative, to create one central agency devoted to businesses. It's being touted as a way to streamline the federal government, save tax dollars and help businesses more efficiently.
6. More SBA lending
The budget calls for increasing the SBA’s flagship 7(a) loan program by 12 percent—from $18.75 billion in 2015 to $21 billion in 2016. The move would require no additional tax dollars, according to BizJournals.com, and would be paid for through loan fees.
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