WASHINGTON — President Barack Obama launched initiatives last week designed to aid small businesses in an aggressive push to get banks to lend more to struggling entrepreneurs.
The measures include boosting bank’s liquidity with up to $15 billion to thaw secondary credit markets for Small Business Administration (SBA) loans, reducing small-business lending fees and increasing the government guarantees on some SBA loans to 90%. The administration also announced that the 21 largest banks receiving government bailout funds must report monthly on how much lending they do to small businesses.
The goal is to help those businesses make payroll, buy equipment and maintain or expand employment in the face of job losses.
“As president, I will continue to do everything in my power to ensure that you have the opportunity to contribute to your community, to our economy and to the future of the United States of America,” Obama told small-business owners gathered in the White House East Room.
The initiatives also include a series of new Internal Revenue Service (IRS) rules for temporary tax breaks for small businesses. Under the new rules, small businesses:
- That earn up to $15 million will be allowed to claim losses for the past five years in the current tax year.
- Can write off up to $250,000 in investments this year.
- Can reduce estimated tax payments to 90% of the previous year’s filing.
- Are allowed to take larger depreciation deductions within the first year of property purchases.
In addition, investors may exclude 75% of capital gains on small-business investments.
Two of the provisions went into effect immediately — the elimination of certain SBA loan fees and raising guarantees on some 7(a) loans up to 90% — according to Darryl Hairston, acting administrator of SBA.
“With these critical steps by SBA, and the Treasury Department’s commitment of up to $15 billion aimed at getting lending markets flowing again, we are standing up with small-business owners across this country and telling them how we are going to put much-needed capital in their hands,” says Hairston. “We hope small businesses will take the opportunity to ask their banks about the SBA loans that might be available to them. And we encourage community banks and other lenders to work with us to reach as many qualified borrowers as we can during these difficult times.”