The president pledged to extend loan aid and tax breaks to small businesses and to create a new tax credit for hiring new workers in a speech at the Brookings Institution today. He also suggested the Treasury will use some of the TARP money originally intended to bail out banks to aid small businesses.
Following the White House jobs summit last week, a tour of businesses in Allentown, Pa., and a forum last month to address small business access to capital, Obama’s speech today is the latest recognition that a Main Street recovery must parallel Wall Street’s rally to ease unemployment.
Aside from the new hires tax credit, a lot of the small business aid extends existing tax and lending relief into next year. The details available are here:
He wants to create a short-term tax credit for new hiring in 2010 (a proposal Obama floated over a year ago in the campaign).
He wants to eliminate capital gains taxes on new equity investments in small businesses for one year (these are 75% excluded for now).
He wants to extend the stimulus provision that lets businesses immediately deduct up to $250,000 in capital investments to 2010.
He wants to keep the increased guarantees and reduced fees on SBA loans going into 2010.
From the speech:
Building on the tax cuts in the Recovery Act, we’re proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. And I believe it’s worthwhile to create a tax incentive to encourage small businesses to add and keep employees, and I’m going to work with Congress to pass one.
Now, these steps will help, but we also have to address the continuing struggle of small businesses to get loans that they need to start up and grow. To that end, we’re proposing to waive fees and increase the guarantees for SBA-backed loans. And I’m asking my Treasury Secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.
There’s been chatter about using TARP funds to aid small businesses for months, with few details yet. Such a proposal may have become more viable since the Treasury announced Monday that the cost of the bailout appears to be $200 billion less than the $341 billion originally expected.
Aside from small business aid, Obama announced investment in infrastructure and a plan modeled on “cash for clunkers” to encourage homeowners to make their homes more energy efficient.
Venture capitalist and White House adviser John Doerr (of Kleiner Perkins Caufield & Byers) pitched a Cash-for-Caulkers program to weatherize homes just over a month ago. A nationwide tax credit for weatherizing homes could bolster the construction industry and countless small contractors who have been wanting for work since the housing bust. Such a program needs approval from Congress.