Senate Passes Small-Business Aid Bill

WASHINGTON (AP) -- The Senate passed long-delayed legislation Thursday designed to open up credit to small businesses and award them with other incentives to expand and hire new workers.


The measure would establish a $30 billion government fund to help open up lending for credit-starved small businesses, cut their taxes and boost Small Business Administration loan programs. The new loan fund would be available to community banks to encourage lending to small businesses. Supporters say banks should be able to use the fund to leverage up to $300 billion in loans. This legislation would also aid lending by lowering Small Business Administration loan program fees and raising loan guarantee and lending limits.

"This small business jobs bill would give small businesses $12 billion in tax cuts. It would increase small business lending. It would help small business owners to get private capital to finance expansion and hire new workers," said Senate Finance Committee Chairman Max Baucus, D-Mont. "And all these things would help small businesses to create as many as a half a million jobs."

After Senate passage, the bill would return the measure to the House, which is likely to approve it for Obama's signature.

The small business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Long-term investors in some small businesses would be exempt from paying capital gains taxes. But in the near term, the bulk of the tax cuts would actually go to big companies to allow them to more quickly recover the costs of capital improvements through depreciation. The measure also would allow small business owners to deduct the costs of health insurance for themselves and their families from self-employment taxes, but only for the 2010 tax year.

Much of the bill would be paid for by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire.