After attempting to appeal to small business owners earlier this week with a proposal to extend Bush-era tax cuts for households with income under $250,000, President Obama today buttered up small businesses again. The White House announced of a set of six initiatives designed to help small businesses expand and create jobs by streamlining some cumbersome processes for getting paid by the government and for getting certain government loans and bonds. The plan also addresses two tax credits.
In a statement, the White House said five of the initiatives are "immediate executive actions" and the sixth is a legislative proposal.
The package aims to help Federal small business subcontractors get paid faster; reiterates the President's support for permitting small businesses to write off up to $250,000 in capital investments in 2013; revamps the Small Business Administration's Small Loan Advantage program; streamlines application paperwork for SBA surety bonds and SBA's Disaster Loan Program; and, legislates reforms to make it easier for community development entities to attract private sector funds for businesses in lower‐income communities.
The details of the President's initiatives issued by the White House are:
- Accelerate payments to small business subcontractors: Through the Office of Management and Budget, the President will direct agencies to make contract payments along an accelerated timeline to all prime contractors for the next year (typically 15 days after receipt of proper documentation, as opposed to 30 days), with the understanding that those prime contractors will similarly accelerate payments to their small business subcontractors.
- Announce support for Section 179 expensing at $250,000 for one year (requires legislation): President Obama is calling on Congress to let small businesses write off up to $250,000 in capital investments in 2013, such as machinery and equipment, to drive productivity. This builds on the President's proposal for 100% expensing for all firms in 2012. Because an increase in Section 179 expensing was part of the 2001 / 2003 tax cuts, this proposal is included in the President's call for extending those tax cuts for the middle class next year. Without that extension, the expensing limit for small businesses is scheduled to decline to only $25,000 in 2013.
- Increase access to capital through SBA's Small Loan Advantage (SLA) 2.0: SBA is re-launching Small Loan Advantage, one of its key small dollar loan products, as SLA 2.0. This revamped program raises the maximum loan amount from $250,000 to $350,000, streamlines the loan process, and makes it easier for lenders to extend loans to small businesses across America.
- Launch "Quick App" for surety bond guarantees under $250,000: SBA is launching "QuickApp," a streamlined application that will eliminate the need for contractors to complete five unnecessary forms to apply for surety bonds. Providing small firms, particularly in the construction industry, streamlined access to these bonds will make it easier for them to compete for and win additional business, which is important to allowing them to expand and create jobs.
- Reduce paperwork for SBA's Disaster Loan Program: Cutting the online application from 80 screens to three or four screens (depending on loan type) will allow families and businesses easier and quicker access to support for rebuilding after a disaster.
- Align New Markets Tax Credit with the needs of investors in growing small firms: The Obama Administration is working on a set of regulatory reforms to the existing New Markets Tax Credit that will make it easier for community development entities (CDEs) to attract private sector funds for investment in startups and small businesses operating in lower‐income communities. The forthcoming regulations are designed to encourage CDEs to invest in other types of small local businesses by relaxing the reinvestment requirements for CDEs investing in certain operating businesses. The Treasury Department is also considering regulatory reforms that would further simplify the requirements for these CDEs and intends to publish these for comment in the future.
