The latest Small Business Bill Broken Down
The Senate passed the Small Business Lending Assistance and Tax Relief Bill this past Thursday. Democrats won a 61-38 vote to pass the legislation, joined by two Republicans. The bill now needs to be approved by the House before going to President Obama’s desk for his signature.
The bill, which becomes law on January 1, 2011 is a follow up to previous successful measures: one gave small businesses a temporary payroll tax holiday if they hired jobless, and a second extended assistance to the unemployed, cash-starved state governments and local school districts.
Who qualifies: Businesses with 500 workers or less for most manufacturers and $7 million and under in annual sales for most nonmanufacturing industries.
Will the Bill add to the deficit?: No, the Bill would would be paid for by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire.
What are the key provisions of the Bill?
This bill is a right step towards the right direction to get small businesses much needed relief. I am however concerned whether the community banks will be willing to overlook bad credit. Republican lawmakers have criticized that aspect of the bill saying that it encourages banks to loan money to un-credit worthy people.
However, my answer to them is that don’t hold the immediate past against them. It is the circumstances of our failing economy that caused many small, very small and very very small businesses, including Mom and Pop shops to dip in their credit rating in the first place. I believe that most small business owners who may fall into this category are victims of the circumstance of our economy and are not unscrupulous individuals looking to escape their obligations. More likely than not, before the markets tanked, those small business owners were making good on their obligations and operating in good standing.
I am hopeful that the community banks that receive the funding will incorporate in their lending criteria a mechanism to take into account a businesses credit standing before the economy tanked. That would be a better indicator of a company’s credit worthiness rather than whatever is in their recent credit reports.
I am sure there are thousands of very very very small businesses and fledgling start ups that agree with me.
If the biggest businesses can get a bail out, the smaller guys who all agree are the biggest employers deserve a fair shake too.
Rotornews has a more specific breakdown. Click HERE.