ARRA: Helping Small and Family Owned Businesses

ARRA is designed to help businesses quickly recover costs of new capital investments that will help create jobs and encourage growth.  The bill contains the following tax provisions to help incentivize job creation and growth.
 

Bonus Depreciation:  Helps businesses quickly recover costs of new capital investments by extending the increased bonus depreciation (an immediate 50 percent write-off) for businesses making investments in new plants and equipment in 2009.

Buying Back Debt:  Provides assistance to companies looking to reduce their debt burdens by delaying the tax on businesses that have discharged indebtedness income, which will help these companies strengthen their balance sheets and obtain resources to invest in job creation.

Small Business Expensing:  Spurs small business investment by extending increased small business expensing, which doubles the amount small businesses can immediately write off for capital investments and purchases of new equipment made in 2009 from $125,000 to $250,000. 

Small Business Loss Carrybacks:  Increases cash flow for small businesses by providing a 5-year carryback of net operating losses (NOLs).  This would allow small businesses (with gross receipts of less than $15 million) to write off losses incurred in 2008 against taxes assessed over the previous five years (current law limits NOL carryback to the previous two years).

Small Business Investment:  Spurs investments in small businesses by cutting the capital gain tax (by increasing from 50 percent to 75 percent the capital gains that are excluded from tax) for investors in small businesses who buy stock (in the next two years) and hold it for more than five years.  

3% Government Withholding:  Delays the mandate that federal, state, and local governments withhold 3 percent of payments to businesses for goods and services, which is supported by the National Small Business Association.

Jobs for Unemployment Veterans or Youth:  Encourages new job creation with business tax credits for hiring recently discharged unemployed veterans and youth that have been out of work and out of school for the 6 months prior to hire.
 
Small Business Administration Loans:  The ARRA provides over $700 million in small business loans to free up capital and leverage billions in small business investment. By allowing the Small Business Administration to play a more active role and by unfreezing credit markets, this will give smaller firms access to the capital they need to stay afloat, create jobs and help drive an economic recovery.

Provides $375 million for temporary fee reductions or elimination for its 7(a) and 504loan programs.  7(a) loans may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business.  504 loans are for fixed asset projects and may be used for purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery or equipment.

• Increases the loan guarantee amount from current levels to as much as 90 percent.  Presently, the SBA can guarantee loans up to 85 percent on loans up to $150K and up to 75% on loans greater than $150K.
• Creates a new loan program to provide deferred payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to six month.  These loans will be 100 percent guaranteed by the SBA and repayment will not begin until 12 months after the loan is fully disbursed.

Additional Information on accessing Small Business loans under the ARRA may obtained at  http://www.sba.gov/recovery/

 

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