Archive for September, 2010

Background on the Small Business Bill Signing Today

Written By The White House - Office of the Press Secretary, September 27, 2010

Today, President Obama will sign the Small Business Jobs Act, a bill that will give our nation’s small businesses support and incentives to help them grow and hire.  The bill includes a series of small business proposals that the President put forth earlier this year, and small businesses will start benefiting from the bill on day one.

The President will be joined at the signing today by a group of small business owners who will benefit from the new legislation, some of whom the President has previously met with as he fought to pass this bill.  He will also be joined by Small Business Administrator Karen Mills, Treasury Secretary Tim Geithner, and Members of Congress. 
 
The Small Business Jobs Bill Will Provide Immediate Support for Small Businesses:
 
The bill immediately extends successful SBA Recovery Act provisions, meaning that within a few days, it will restart the SBA’s Recovery lending, beginning with the more than1,300 small businesses that have been waiting to get the credit they need – with thousands more benefitting in the coming weeks.
 
And the bill includes eight new small business tax cuts – all effective as of Monday, and applying to small businesses’ taxes for this year – providing an immediate incentive for businesses to make new investments and expand.
 
For example:
  • if you are a small business and you buy new equipment, you can immediately write off the first $500,000 of your investments;
  • if you are one of over one million eligible small businesses, key long-term investments in your company will be subject to zero capital gains taxes;
  • if you are an entrepreneur and take a chance on a new idea, you can deduct the first $10,000 of your start-up costs;
  • and if you are self employed you can deduct 100 percent of the cost of health insurance for you and your family from your self-employment taxes.
 
MORE DETAILS:
Eight Small Business Tax Cuts – Effective Today, Providing Immediate Incentives to Invest: The President had already signed into law eight small business tax cuts, and on Monday, he is signing into law another eight new tax cuts that go into effect immediately.
 
  1. Zero Taxes on Capital Gains from Key Small Business Investments: Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
  2. Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.  This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
  3. Extension of 50% Bonus Depreciation: The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
  4. A New Deduction of Health Insurance Costs for Self-Employed: The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
  5. Tax Relief and Simplification for Cell Phone Deductions: The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
  6. An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses: The bill temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
  7. A Five-Year Carryback Of General Business Credits: The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
  8. Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business: The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a disproportionately large penalty on small businesses in certain circumstances – to a percentage of the tax benefits from the transaction.
 
Extension of Successful SBA Recovery Loan Provisions— Immediately Supporting Loans to Over 1,300 Small Businesses:  With funds provided in the bill, SBA will begin funding new Recovery loans within a few days of the President’s signature, starting with the more than 1,300 businesses – with loans totaling more than $680 million – that are waiting in the Recovery Loan Queue.
 
  • In Total, Extension of Provisions Which Have the Capacity to Support $14 Billion in Loans to Small Businesses: Extending these Recovery loan enhancements – which increase guarantees for SBA’s largest loan program (the 7(a) program) to 90% and reduce fees for the 7(a) and 504 program – has the capacity to support $14 billion in lending to small businesses.  Already, SBA Recovery loan provisions have supported $30 billion in lending to over 70,000 small businesses.
  • Within Coming Weeks, the Bill Will Allow SBA to Support Larger Loans As Well: The bill also increases the maximum loan size for SBA loan programs, which in the coming weeks will allow more small businesses to access more credit to enable them to expand and create new jobs. The bill:
    • Permanently raises the maximum loan size for the SBA’s two largest loan programs, increasing maximum 7(a) and 504 loan size  from $2 million to $5 million and the maximum 504 manufacturing related loan size from $4 million to $5.5 million.
    • Permanently raises the maximum loan size for SBA microloans, increasing it from $35,000 to $50,000 and strengthening a critical tool for entrepreneurs and business owners in underserved markets to access start-up capital.
    • Temporarily raises the maximum loan size for SBA Express loans from $350,000 to $1 million, providing greater access to working capital loans that small businesses use to purchase new inventory and take on their next order – allowing them to create new jobs.
  • Treasury Is Working to Quickly Implement the Small Business Lending Fund and State Small Business Credit Initiative:  In addition to these SBA provisions, Treasury is working to quickly implement two new programs designed to support private-sector lending to credit-worthy small businesses, and expects to release further details in the coming weeks concerning applications for these programs.
    • The Small Business Lending Fund would make available $30 billion in capital to small banks with incentives to increase small business lending, potentially supporting several multiples of that amount in new credit.
    • The State Small Business Credit Initiative will support at least $15 billion in new lending by strengthening state small business programs – many of them facing budget cuts – that leverage private-sector lenders to extend additional credit.

For more information, visit The White House Briefing Room

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Affordable Care Act of 2010 To Benefit 30 Million Women

Written By National Association for the Self-Employed, September 22, 2010

The Commonwealth Fund recently released a study which explains how 15 million uninsured women and 14.5 million insured women will benefit from the implementation of the health reform law (The Affordable Care Act of 2010). The report, “Realizing Health Reform’s Potential: Women and the Affordable Care Act of 2010,” found that the Act is likely to stabilize and reverse the growing health costs that women face.health care costs

Insurers often consider women to be higher risks than men, and women tend to face higher premiums in the individual market as a result. Additionally, pregnancy and caretaking of children and elderly parents cause women to spend more time in direct contact with insurance companies and health care providers than men. According to the study, other provisions that will benefit women in the next few years include:

  • Extended dependent coverage – Children up to the age of 26 may join or stay on a parent’s policy until 2014, provided they are not eligible to enroll in an employer-sponsored plan.
  • Restrictions on annual benefit limits – Between Sept. 23, 2010 and Sept. 23, 2011 annual benefit limits may be no less than $750,000. Between Sept. 23, 2011 and Sept. 23, 2012 annual benefit limits may be no less than $1.25 million. Between Sept. 23, 2012 and Jan. 1, 2014 annual benefit limits may be no less than $2 million. The Affordable Care Act bans annual benefit limits completely in 2014.
  • Bans on rescissions of coverage – Starting Sept. 23, 2010 insurers will be banned from rescinding health policies. 
  • Pre-existing condition insurance plans – Uninsured women with pre-existing conditions have access to Pre-Existing Condition Insurance Plans (PCIP) until 2013. Twenty-nine states and the District of Columbia will operate their own PCIP systems using federal subsidies, while the nonprofit Government Employees Health Association (GEHA) will operate PCIPs in the other 21 states. Visit healthcare.gov for more information on PCIPs. 
  • Increased coverage for preventive care – The health care law requires that health plans cover recommended preventive services and not impose cost-sharing requirements on those services beginning Sept. 23, 2010. Preventive care services that will be covered include breast cancer screening, osteoporosis screening and immunizations for children and adolescents.

For more information, please read the full Commonwealth Fund report here. 

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Senate Passes Landmark Small Business Jobs Creation Bill

Written By U.S. Senate Committee on Small Business and Entrepreneurship, September 17, 2010

Landrieu-sponsored legislation will increase access to capital to America’s small businesses.

WASHINGTON – The United States Senate yesterday passed a landmark small business jobs bill that aims to boost billions of dollars of lending and investment to America’s entrepreneurs and provides $12 billion in tax cuts to small businesses from coast to coast.  In addition, recognizing that less one percent of small businesses export, this small business bill expands trade and export opportunities, a real growth area for the near term.  Finally, the bill increases small business access to Federal contracts and expands counseling and technical assistance programs by partnering with hundreds of non-profits throughout the country.  The bill passed the Senate by a significant majority, 61-38, with Senators George Voinovich, R-Ohio, and George LeMieux, R-Fla., joining Democrats in passage of the bill.  United States Senate Committee on Small Business and Entrepreneurship Chair Mary L. Landrieu, D-La., made the following comment on the passage of the bill:

            “The passage of this bill is a long-awaited victory for the 27 million small businesses in America.  Upon signature by the President, these businesses will benefit from $12 billion in immediate tax cuts.  $12 billion will transfer from the Federal treasury into the hands of small business owners to help them navigate these difficult financial times.  It is the right thing to do and the smart thing to do.  We could not have passed this legislation without the leadership of the Majority Leader, Harry Reid, Senators Cantwell, Boxer and Merkley and the entire Democratic Caucus who fought so hard for this legislation.”

            “Specifically, we owe a special thanks Senators George Voinovich and George LeMieux for crossing the aisle and putting the country ahead of partisan politics.”

Specifically, the Small Business Lending Act will:

Provide $12 Billion in Targeted Tax Cuts for Small Businesses

  • Allows for a 100 percent exclusion of capital gains tax on small business investments made in 2010
  • Increases the maximum deduction for start-up expenditures in 2010 and 2011 from $5,000 – $10,000
  • Extends the American Recovery and Reinvestment Act bonus depreciation provision for 1 additional year for qualifying property purchased and placed into service in 2010
  • Allows self-employed taxpayers to deduct health care costs for payroll tax purposes on 2010 returns

Initiate a New Strategic Partnership with Healthy Community Banks

  • Creates a $30 billion Small Business Lending Fund that utilizes healthy community
    banks as a conduit to increase lending to small business, a provision that will generate $1 billion for the treasury.
  • Provides $1.5 billion in grants to support at least $15 billion in new small business
    lending through already successful state run programs  

Strengthen the Core SBA programs

  • Extends certain SBA American Recovery and Reinvestment provisions that eliminate borrow fees and increases the government guarantees on SBA loans from 75 percent to 90 percent.
  • Permanently increases loan limits on SBA loans
  • Expands the SBA’s trade and export finance programs

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Senate Votes to End Debate on Small Business Job Creation Package

Written By U.S. Senate Committee on Small Business and Entrepreneurship, September 15, 2010

WASHINGTON – The United States Senate yesterday voted to end debate on the Small Business Job Creation Package after months of partisan wrangling that stalled support to America’s more than 27 million small businesses. Senators George Voinovich, R-Ohio, and George LeMieux, R-Fla., joined Senate Democrats in the 61-37 vote to end the debate. United States Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship made the following comment on the vote to end debate:

“Today, we are one step closer to strengthening the small businesses in America, restoring the economy, and opening the door to job creation for millions of American’s still out of work. Two Republicans Senators decided to put party politics aside because this bill is the right thing to do. I commend Senators Voinovich and LeMieux for staying the course despite opposition from their party. Together, we took a stand for small businesses in America this morning, and we are on course to finish this legislation soon and get support into the hands of small businesses immediately.”

Over the past two years, small firms have accounted for between 80 percent of net job losses. The Small Business Job Creation Package would create 500,000 new jobs at a time when America’s 27 million small businesses are starving for adequate access to capital and desperately seeking to hire workers and expand their businesses. This fully paid-for bill would increase access to capital, encourage investment, promote entrepreneurship, and promote small business fairness.

Today, Senator Landrieu joined Democratic Senators Barbara Boxer, Maria Cantwell and Jeff Merkley in a press conference to discuss the widespread support for this package. To view the video from the press conference, please click here.

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Innovate ND award winner Clean Republic

Written By Alerus Small Business Connect, September 8, 2010

Small Business Connect highlights regional entrepreneurs and small business owners who have been recognized by area Chamber of Commerce organizations and/or the State of North Dakota for their achievements. This week’s post contains excerpts from our conversation with Michael Shope, CEO of Clean Republic LLC. Clean Republic manufactures and distributes practical alternative energy products, including electric bike conversion kits. The company launched its first product in the spring of 2009.

Based in Grand Forks, North Dakota, Clean Republic was recently named a 2010 Innovate ND winner. Innovate ND is a business venture competition that helps entrepreneurs grow their businesses through cash prizes and in-kind professional services.

customer electric bike, city bike

City Bike

Small Business Connect (SBC): What inspired you to become an entrepreneur?

Michael Shope (MS): I work as an entrepreneur because I care so greatly about overlapping my occupation with issues and work that I care about. It’s possible to do this by getting hired in another company at the “perfect job” that has a cause you believe in, people you like, and an enjoyable environment, but statistically it is very improbable. I find it much easier to fill a large proportion of my time running my own business with work that I believe in and that makes me happy than it is to save up money for five days doing a job I hate, and then try to turn my money into life enjoyment during Saturday and Sunday. Being an entrepreneur is a way to get a very efficient “life value per hour” ratio.

SBC: What have been your biggest challenges?

MS: One of our biggest challenges has been to decide which tasks to do ourselves and which tasks to pay outside service providers or contractors to complete. If we do too much work ourselves, we have no time or energy left to grow the business, and consequently, it would stay a small cottage industry. If we outsource responsibility and pay “consultants” to make all our sales and planning decisions, we could run out of cash or be pushed into bad decisions by outsiders who don’t really care about our project.

SBC: How have you overcome these challenges?

MS: We pay outside people to help us with the most basic and simplest tasks we can identify; the things that require the least passion or attention to the business philosophy. We also use Google AdWords advertising instead of spending thousands of hours manually generating web traffic. We remain focused on the most important things: product development, customer service, and retail website design.

Hill Topper Electric Bike Conversion Kit

Hill Topper Electric Bike Conversion Kit

SBC: How has the economy impacted your business?

MS: We’re selling electric bike kits faster than we can make them. It’s a very affordable alternative to a car, and it benefits from all the eco-buzz about bike riding. Our product is one that people want in order to make changes to their lifestyle due to the current forces in our economy.

SBC: What are your top three tips for people dreaming of starting their own business?

MS:

  1. Get a part-time job that requires ONLY as many hours as you need to pay your most basic bills. Any more time at a part time job takes you away from your start-up. Any less will cause you to spend savings and cause you to make rushed, probably poor decisions in a hurry to make an untimely profit from your new business. You need a good personal “survival” budget in the start-up phase.
  2. If you’re thinking of some new product, go to the hardware store and make a prototype immediately, and then sell it. The minute you try this, you’ll find 10 gaping holes in your imaginary business plan, and then you will find solutions to those problems. Also, sell your prototypes. Right away. Worried about your budding brand? Sell the stuff on eBay in auction format. eBay sales are good at indicating the general issues with your product, but your brand is “insulated” because eBay customers are by definition part of a special club of consumers who don’t expect everything to be perfect. Your prototypes will give you very clear indications of how your final products will be received by future customers.
  3. Learn some new skills instead of throwing money at a consultant or “expert.” Only pay other people to do something for you after you have done it yourself. It’s okay to outsource tasks, processes, or services, but if you didn’t do it yourself first for a few hundred hours, you’ll have no idea if you’re getting scammed or getting your money’s worth.

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