In search of a solvent for the 2008 financial crisis, in 2010, lawmakers waved through the Small Business Jobs Act. Why jump-start the small business sector instead of bolstering the big boys? Because for the past 15 years, small businesses (fewer than 500 employees) have generated close to 65% of all new jobs.
Moreover, the 2008 $825 billion stimulus package didn’t do much in the way of small business stimulation, so politicians wanted to rectify the oversight.
Provisions Of the Small Business Jobs Act
- A permanent increase in the size of the maximum loan available under the 7(a) and 504 loan programs from $2 million to $5 million; a corollary increase in the maximum loan amount available through the 504 loan program specifically targeted at manufacturing from $4 million to $5.5 million.
- A permanent increase in the micro-loan cap from $35,000 to $50,000 specifically designed to help entrepreneurs and startups.
- A temporary increase in the loan amount available to SBA Express loan recipients from $350,000 to $1 million.
The bill also introduced eight significant tax cuts for small businesses:
- The elimination of all capital gains taxes for small business investments held five years or over.
- An increase in the write off for capital investments from $250,000 in Year One and $25,000 in Year Two to $500,000, and increasing the threshold for these write-offs to $2 million.
- An extension of the 50% bonus depreciation through the close of 2010.
- A health insurance deduction for the self-employed.
- Simplified rules regarding the deduction of cell phones and cell phone-related expenses.
- A temporary increase in the deduction for start-up costs from $5,000 to $10,000 (with a ceiling of $60,000.)
- For certain small businesses, the ability to offset taxes – including the Alternative Minimum Tax – through business credits from the past five years.
- A decrease in penalties for tax errors that disproportionately affect small businesses and small business owners (particularly sole proprietors.)
Speak With A Lawyer About Issues Related To The Small Business Jobs Act
Counter-intuitive as it might sound, historically recessions have been excellent times to launch startups. Just ask FedEx.
Don’t launch a startup without first consulting an attorney to make sure your plan and business are on the right side of the law. And remember: provisions in the Small Business Jobs Act can be used to your advantage; get in touch with a startup lawyer to find out how.