Bill Helping Small Businesses Inches Closer
BOSTON (TheStreet) -- The Senate yesterday passed a legislative package of small-business tax incentives and measures intended to improve access to capital.
The Small Business Jobs and Credit Act of 2010 creates a $30 billion fund to provide small banks (those with assets under $10 million) access to capital earmarked for small-business lending. Proponents of the bill say this pool of capital, coupled with government guarantees, will ease the credit crunch lenders have held to since the onset of the recession and could eventually leverage up to $300 billion in additional lending. Also included are roughly $12 billion in tax breaks and incentives.
The Senate bill, passed 61-38, overcame Republican opposition when two members -- George Voinovich of Ohio and George LeMieux of Florida -- broke ranks. It heads to the House next week, where an earlier version was approved, then onto the White House for ratification.
A key piece of the bill’s tax incentives involves breaks related to the purchase and depreciation of qualified equipment and machinery. In 2008 and last year, businesses were allowed to immediately write off 50% of the cost of new equipment. The new bill extends that bonus depreciation through this year -- it was initially to expire at the end of last year -- and is retroactive to Jan. 1. Companies are also allowed to write off up to $500,000 in capital expenditures in tax years 2010 and 2011.
The bonus depreciation provision is the most expensive tax break in the Senate bill, with $5.4 billion spread over 10 years and an initial cost of $38 billion in its first two years, according to an analysis by CCH, a Wolters Kluwer firm providing tax, accounting and audit services.