2009 The United States Congress approved the American Recovery and Reinvestment Act, which aimed to create and save jobs, jumpstart our economy, and build the foundation for long-term economic growth. The $787 billion dollar package will provide funds that will assist state and local government and small businesses hard-hit by the current economic pressure.
About 10% of the Recovery Act funds (approximately $730 million) will go to the Small Business Administration (SBA) to help small businesses at this critical time. Small businesses are the key drivers in our nation’s economic recovery. According to SBA, “the goal of the programs is to restart lending, get much-needed capital in the hands of small business owners across the country, stimulate the economy, and put Americans back to work.”
The Recovery package will provide funds to small businesses with the following programs:
Raising Loan Guarantee to 90 percent and Temporary Elimination of Loan Fees - for 7(a) and 504 loans to qualified small businesses (504 loans can be used to purchase land and construct new buildings, purchase and renovate existing buildings, acquire and install machinery, and expand existing facilities).
Expanded Microloans - The bill provides $50 million in new SBA microloans, which are delivered by nonprofit community-based intermediary lenders across the country. These loans can be for up to $35,000 and come with technical assistance and training for every borrower.
Expanding SBIC Available Capital - The Recovery Act also enables SBA to expand its Small Business Investment Company (SBIC) program to assist this source of venture capital.
Sales Tax Deduction for Purchase of New Vehicles - Small business owners will be able to deduct state and local and excise taxes paid on the purchase of new cars, light trucks, recreational vehicles and motorcycles through 2009.
Carry Back of Net Operating Losses for Small Businesses - Small business owners may be able to carry back net operating losses to the two taxable years for which the loss arises, and carry forward to each of the succeeding twenty taxable years after the year that the loss arises.
Extension of Bonus Depreciation - For example, if you purchased equipment- tractors, computer, etc.- in 2008 or 2009, you will be able to write off 50% of the cost of depreciable property.
Small Business Expensing - Small business taxpayers may elect to write-off the cost of capital expenses in the year of acquisition, in lieu of recovering these costs over time through depreciation.
As of today, the implementation of this program has not begun. We hope that, by this summer (2009), banks will start releasing the money (lending) to small businesses. Now that the SBA will guarantee small business loans by 90%, there is no fear of banks losing their money.