Earlier this week, President Obama signed a new bill intended to help small businesses gain better access to credit and to boost job creation for the ailing employment market. Some of the bill’s key measures will kick in immediately.

Ongoing economic pressures have had a disproportionate effect on small businesses in the United States, particularly in terms of constrained access to credit and slowed demand. These challenges prompted Congress to pass a new bill, which President Obama signed into law on Monday, designed to help smaller companies obtain loans, reduce certain tax burdens and spur new job creation.

The long-delayed bill, known as the Small Business Jobs Act of 2010, was recently approved by the Senate following a long and contentious debate, and passed the House of Representatives last week before landing on the president’s desk.

“Government can’t guarantee success, but it can knock down barriers to success, like the lack of affordable credit,” Obama said in a speech at the signing. “Government… can’t create jobs to replace the millions that we lost in the recession, but it can create the conditions for small businesses to hire more people, through steps like tax breaks.”

According to the White House, one of the key provisions of the new bill is the creation of a $30 billion small business lending fund to provide capital to small banks with incentives to increase small business loans. An additional $15 billion will be used for a state small business credit initiative that supports private-sector lending for state-run credit programs.

The bill will also expand U.S. Small Business Administration (SBA) loan provisions by “funding new Recovery loans within a few days of the President’s signature, starting with the more than 1,400 businesses — with loans totaling more than $730 million — that are waiting in the Recovery Loan Queue. In total, the extension of these provisions provides the capacity to support $14 billion in loans to small businesses.”

The maximum loan size for the largest SBA programs will more than double within the next few weeks, permanently raising 7(a) and 504 small business loans from $2 million to $5 million, while the maximum for the 504 manufacturing-related loan will rise from $4 million to $5.5 million.

“This bill includes billions in tax cuts specifically targeted to small businesses so they can put more of their own resources into growing their business,” SBA Administrator Karen Mills explained in a statement from the SBA. “At the same time, this bill ensures those very businesses have access to the capital they need by extending SBA’s successful Recovery loan enhancements and putting local, community banks in a position to be a real partner for small businesses and entrepreneurs. This bill is the right step forward for our nation’s small businesses and our economy.”

Some of the key tax changes in the new bill include:

• Zero taxes on capital gains from small business investments made through the rest of the year;
• Expanded eligibility to write off capital investments;
• An extended 50 percent bonus depreciation;
• New health insurance deductions for the self-employed;
• Simplified tax deductions for business cell phones;
• Increased deductions for start-up entrepreneurial expenses;
• A general business credit “carry back” that can offset five years of taxes; and
• A reduction in penalties for small businesses’ tax reporting errors.

Despite the attempts to ease small businesses’ tax burden and strengthen their access to credit, some are worried that new measures do not go far enough in addressing the core problems facing small businesses.

“While the bill passed today will help some small businesses that either qualify for the specified tax breaks or qualify for new loans, it falls short of addressing the most significant problems facing all small business owners — lack of sales and uncertainty,” the National Federation of Independent Business (NFIB) said in a statement. “If Washington wants small businesses to resume their traditional role as our nation’s job creators, Congress should extend all expiring tax rates, pass meaningful estate tax reform and repeal the 1099 reporting requirement.”

It remains to be seen whether the plan will lead to increased hiring and encourage the long-term job creation needed to repair the ailing employment market, but many individual businesses can already or will soon be able to benefit from the recently introduced changes.

“Appreciate the good points in this bill and figure out how to take advantage of them when this finally becomes law,” Anita Campbell, the founder of Small Business Trends, writes at AMEX OPEN Forum. “Don’t let the hype about “creating jobs” make you cynical. And keep advocating for additional legislation to make the environment in which we do business a friendly one to small business.”

Resources

Small Business Jobs Act of 2010
U.S. Congress, Sept. 23, 2010

Remarks by the President at Signing of the Small Business Jobs Act
The White House, Sept. 27, 2010

President Obama Signs Small Business Jobs Act — Learn What’s In It
The White House, Sept. 27, 2010

Statement from Administrator Mills on House Passage of Small Business Jobs Bill
U.S. Small Business Administration, Sept. 23, 2010

NFIB Statement on Senate Small Business Jobs and Credit Act of 2010
by Susan Eckerley
National Federation of Independent Business, Sept. 16, 2010

The Small Business Jobs Act — Not So Much about Jobs, But Some Good Provisions Nonetheless
by Anita Campbell
AMEX OPEN Forum, Sept. 24, 2010