There is no economic segment more important to the success and survival of our economic system then the American small business. Small businesses employ most of America and yet for the past three decades, it has been Wall Street and the investment banks that have been receiving most of the tax and capital advantages, many times at the expense of small businesses and their owners.
The Recovery and Reinvestment Act of 2009 provides small businesses with badly needed infusions of tax incentives, loans, and more access to investment capital. There are a host of new tax advantages for small businesses through the Recovery and Reinvestment Act that is worth noting if you are a small business owner.
One such tax advantage includes allowing small businesses a much longer window of time in which to carry-back their net operating losses by allowing, among other things, to go back as many as five years to take advantage of the small business tax break. Consequently, qualified small businesses will receive, in essence, a rebate on their previous tax years.
The new stimulus package will also increase the SBA’s small business lending program, which in essence funds small businesses with as much as $35,000 in micro business loans. Included in the program is also a work opportunity credit, which supports hiring unemployed veterans as well as troubled teens. A small business that reaches out and hires from these groups of workers are rewarded with special tax credits and other advantages courtesy of the federal government.
The Recovery and Reinvestment Act aims to stimulate the capital and lending needs of today’s struggling small businesses. In support of this objective, there will be an increase to the governments existing loan guarantee program. With government guaranteeing more of the loan to small businesses, lenders are expected to lend more. The more lending, the more the small business is able to capitalize and grow.
The small business loan program provides government guarantees for loans made to eligible small business borrowers who would not otherwise be able to obtain business credit elsewhere.
In addition, to make it more attractive for small business owners, the government will be eliminating most up-front lending fees as well as many of its associated costs. Usually the borrowed money is used to finance small businesses costs and expenses such as equipment, inventory and supplies. The money may also be used to finance receivables, which is otherwise known as factoring. The maximum term for a micro loan is 6 years.
The new program is also expected to make it easier for small businesses to access other forms of credit. In an effort to stimulate investment in small businesses the stimulus program will also be expanding the Small Business Association’s “surety bond program” by raising the maximum investment limit from $2 million to $5 million.
The SBA surety bond program helps small businesses bid on contracts they might not otherwise obtain. The program also includes additional provisions that excludes from taxation up to 75% of any capital gains an investor earns on a small business investment. It also reduces the costs and fees associated with the program. By allowing more capital to flow through the small business, the more growth the small business is likely to experience.
For more information on small businesses tax and financing options under the new small business recovery plan, listings of tax and lending professionals, discount legal services, and small business law, visit
GotTrouble.com