Today, President Obama will sign the American Recovery and Investment Act of 2009. I thought that it might be helpful to state what is in this Act for small business. Here is a run-down of some of the larger items:
· $720 million to help support a number of programs at the U.S. Small Business Administration (primarily reducing fees on 7(a) guaranteed loan guarantees);
· $400 million in support for economic development and entrepreneurship, particularly in distressed rural, urban, and low-income communities; and
· tax incentives for small businesses, including a continuation of section 179 expensing up to $250,000 on new capital investments, loss carry back for up to five years, a delay in the three percent withholding tax for businesses having government contracts, and a reduced capital gains tax for small business investors holding stock for five years or more.
Small firms can take advantage of other parts of the stimulus package, as well. For instance, there are major investments in infrastructure, broadband, green technologies, home winterization incentives, etc., which can benefit large and small businesses alike. Here are some dollar figures for these expenditures:
· $27.5 billion for road construction projects;
· $26 billion to local school districts to enable them to have “21st century classrooms”;
· $7.2 billion for broadband access to underserved areas;
· $15 billion for scientific research;
· $19 billion for health information technology investments;
· $30 billion for improving the nation’s electricity grid and other energy improvements; and
· $5 billion to help weatherize homes for low-and moderate-income homeowners.
Hopefully, small businesses will be able to capitalize on the contracting opportunities just mentioned. In addition, to the extent that the economy starts to improve, small businesses, which account for half of our real GDP and tend to recover quicker from recessions than their larger counterparts, will see indirect benefits from passage of this bill, as well. For more information, refer to the sources below.
– Chad Moutray, Chief Economist