Obama Orders Help for Small Businesses
The changes—immediate executive actions—will accelerate federal payments, reduce paperwork and make it easier for small firms to tap into loans and tax credits. Here's a summary of the announced changes.
1. Bigger capital-investment deductions. The administration announced a legislative proposal to allow businesses to deduct 100 percent of the cost of significant investments, such as the purchase of new equipment, a push also being made by Senate Democrats. (Under the current law, the write-off of those costs is capped at 50 percent.)
2. Paying government contractors. Another initiative announced would accelerate payments to government contractors, "with the understanding that those prime contractors will similarly accelerate payments to their small business subcontractors," Obama says. Payment time will be cut to 15 days from 30 days (after submission of proper paperwork). To read our story on a report detailing who gets government contracts, click here.
3. Raising loan amounts. Obama also calls on the Small Business Administration to increase access to capital by relaunching Small Loan Advantage, raising the maximum loan amount from $250,000 to $350,000, and streamlining the loan process, making it easier for lenders to loan to small businesses.
4. Cutting red tape. The SBA will launch “QuickApp,” which slashes the paperwork for surety bonds under $250,000—letting contractors ditch "five unnecessary forms," according to The White House. Another effort to streamline: The online application for the SBA's disaster loan program will be cut from 80 screens to three or four screens (depending on the loan type).
5. Opening up tax credits. Finally, there would be regulatory changes made to the New Markets Tax Credit, making it easier for community development entities to attract private funds for investment in startups and small businesses operating in lower-income communities.
The changes come after Obama's call for a one-year extension of Bush-era tax cuts for families earning less than $250,000. Republicans say the tax cuts should apply to everyone, and that limiting them hurts small businesses.
"The White House has so little to offer small businesses they've resorted to recycling, reusing and repackaging," Brendan Buck, spokesman for Republican House of Representatives Speaker John Boehner, told Reuters. "This is no solace for small businesses facing a huge tax increase next year under the president's plan."
How much do these changes affect you?