With the passage of the $787 billion economic stimulus bill, everyone wants to know how and what they have coming to them. As many politicians struggled to read the more than 1,000 page document, journalists are having just as hard a time filtering through the most important measures the bill enacts. In the form of small business benefits, there's an argument on both sides on whether the bill does enough.
For starters, you can deduct business expenses up to $250,000 - up from $128,000. Small businesses, which the bill classifies as firms making $15 million or less in gross revenue, will also benefit from a net operating loss carry-back provision. This will allow you to use existing losses to offset taxes paid on profits in the previous five years.
One of the major issues the first stimulus bill was hoping to remedy - which was largely seen as a bank bailout - was to get banks to start loaning money to small businesses again. Right now, this stimulus bill authorizes the Small Business Administration to reduce or eliminate fees for banks participating it its new loan-guarantee programs, which will insure banks against default by small business borrowers.
Small business owners can get some immediate relief from the SBA in the form of loans up to $35,000 - which can be used to pay off up to six months of existing loans. Borrowers must repay the loan within five years and will also not have to make any payments for the first year. The allocated money by Congress is limited though; When the $630 million dollars begins to run out, borrowers will have priority over lenders, and small bank lenders will have priority over the larger ones.
While the SBA "applauds" the Stimulus Bill for the help it will give towards "unlock(ing) credit markets and begin economic recovery for the nation's small business sector," the American Small Business League says the bill offers "no specific provisions to direct even one dollar to those funds to America's 26 million small businesses.
P.S. Be sure to participate in our forthcoming survey on whether you approve of certain elements of the stimulus bill. Thanks.