Congress Approves Small Business Lending Bill

by Mike Godfrey, Tax-News.com, Washington

27 September 2010

The Small Business Lending Fund Act of 2010, which extends and expands certain income tax breaks for small firms, has been sent to President Obama's desk following the bill's approval by the House of Representatives.

Welcoming final approval of the bill by Congress, Obama said that its measures "will help provide loans and cut taxes for millions of small business owners without adding a dime to our nation’s deficit." However, the legislation hasn't attracted widespread bipartisan support, as evidenced by the 237 to 187 vote in the House on Thursday.

"Unfortunately, this bill does nothing to help end the uncertainty that is crippling job creation and hurting small businesses," said Congressman John Boehner, an Ohio Republican. "Instead it puts taxpayers on the hook for even more bailouts. Americans don’t want more ‘stimulus’ spending, more bailouts, and more tax hikes. They want common-sense solutions to help small businesses create jobs, cut spending, and reform Congress."

The legislation establishes a Small Business Lending Fund of USD30bn to provide capital investments to small community banks with assets of less than USD10bn to increase small business lending. The bill also establishes the State Small Business Credit Initiative to provide USD1.5bn in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.

On the tax front, the bill:

• Extends the one-year carryback for general business credits to five years;
• Extends and expands section 179 expensing limits, allowing taxpayers to write off up to USD500,000 in investment expenses beginning in tax years 2010 and 2011;
• Extends the bonus depreciation measure by allowing taxpayers to immediately write-off 50% of the cost of depreciable property placed in service in 2010;
• Increases from 50% to 100% the exclusion from gross income of the gain from the sale or exchange of qualified small business stock acquired after March 15, 2010 and before January 1, 2012; and
• Increases the tax deduction for trade or business start-up expenditures from USD5,000 to USD20,000 in 2010 and 2011

President Obama is expected to sign the bill into law on Monday September 27.

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