Small Business Jobs Act passage gets mixed reactions

A new law aims to help recession-plagued small businesses obtain capital to expand and hire while supporting innovation and entrepreneurship, according to legislators who supported the Small Business Jobs Act passed last month.

But Scott George, owner of Mount Vernon-based Mid-America Dental and Hearing Center, doubts that the Small Business Jobs Act, passed Sept. 16 in the U.S. Senate and signed into law Sept. 27 by President Obama, will accomplish its goals.

“It seems pretty narrow. It’s for people who are expanding,” George said from a business conference in Florida. “Most people aren’t expanding. They’re just sitting tight.”
Small businesses performing renovations or buying equipment and self-employed individuals who buy their own health insurance will benefit through tax deductions, said Brad Jones, Missouri’s director of the National Federation of Independent Business, a nonprofit that represents 9,000 small businesses in Missouri.

“The bill provides up to $500,000 in immediate deductions for investments, which means that if you’re planning on adding new equipment or you’re doing renovation work, this bill might be helpful to you,” Jones said. “The other thing is, it has a one year parity for self-employed who buy their own health insurance.”

The law will: provide $1.5 billion in grants to support small-business lending through state programs; create a $30 billion Small Business Lending Fund for community banks to draw from; prevent small businesses from incurring tax penalties aimed at large corporations; help small businesses that want to export goods; and allow self-employed individuals to deduct health insurance costs to pay self-employment taxes.

The grants will be distributed through existing state small-business lending programs, but specific details as to which ones have yet to be determined, said Laura Myron, spokeswoman for U.S. Sen. Claire McCaskill, D-Missouri, who supported the act. The bill also includes a provision that will make tax penalties imposed on businesses proportional to their sizes, allowing smaller businesses to pay less, Myron said.

Myron said McCaskill’s position is that the government cannot spend its way out of the recession, but it can offer tax cuts that will foster an environment to help businesses create jobs.

Myron said savings accrued by closing tax loopholes will pay for the cost of the new law.
But NFIB’s Jones warned that small-business owners shouldn’t consider the act universal relief.

A missed opportunity, he said, were two proposals that didn’t make the final cut.
Section 9006 of the Patient Protection and Affordable Care Act requires businesses as of Jan. 1, 2012, to report a 1099 form for all purchases made above $600.

The proposed amendments to the Small Business Jobs Act would have repealed that portion of the health care reform, Jones said.

It’s too soon to determine the cost of processing the additional 1099s, said Terry Hicklin, owner of Joplin-based Candy House Gourmet Chocolates.  

“We probably deal with 150 to 200 different vendors,” Hicklin said. “That would mean our accountant issuing 150 to 200 1099s. It’s a bookkeeping nightmare for the accountant. I’m sure it’s going to cost more than $5 apiece.”

Hicklin said his company uses QuickBooks, but many small businesses that still use manual accounting will be impacted more severely.

The act also makes community banks accessible to the new $30 billion Small Business Lending Fund. The application process has not been finalized, but insured depositories, bank and savings and loan holding companies and some community development loan funds are eligible, according to a bill summary. Eligible institutions with less than $1 billion in total assets can apply to receive investments of up to 5 percent of their risk-weighted assets.
Eligible institutions between $1 billion and $10 billion in total assets can receive investments of up to 3 percent of risk-weighted assets, the summary said.[[In-content Ad]]