Washington took a small step toward job growth and economic relief for small business in March 2010 by giving a tax break to businesses that hire new workers. More good news for small business owners is on the horizon: Lawmakers are already looking to make a giant leap forward in the form of two more rounds of jobs bills, this time drilling down to target small businesses.
Economists uniformly consider businesses that employ less than 500 people the engine of economic growth in the United States because these small businesses provide more than 60% of the new jobs in America.
“Small businesses have borne the greatest burden in this economy, and they are the businesses that have the greatest potential to improve it," said US Senator Mary L. Landrieu (D-La.), chair of the Senate Committee on Small Business and Entrepreneurship, which oversees the Small Business Administration (SBA) and is driving upcoming jobs bills to benefit small business. Landrieu and her Republican counterpart, Senator Olympia Snowe (R-Maine), have been allies in pushing several jobs-related bills and are expected to collaborate on a third.
The first economic relief for small businesses comes as a payroll tax holiday. Small businesses that hire laid-off workers will not be subject to the Social Security tax on the hire, a break that can amount to thousands of dollars. The measure, which has been signed into law by President Obama, also provides an instant tax break to businesses that buy new equipment. The maximum benefit applies to investments of at least $250,000.
The second relief measure, which passed the Senate and is pending in the House of Representatives, would extend the maximum SBA loan guarantees to 90% of principal, and ease application fees.
Landrieu and Snowe are joining forces to push a third round of small business relief legislation that could further encourage business lending, help small businesses export and obtain government contracts, and provide more small business counseling to entrepreneurs.
When he signed the first of the bills on March 18, 2010, President Obama called for a move beyond "the partisan morass" in Washington, and declared the bill "a step forward for the American people." He also noted that 8.4 million Americans have lost jobs in the current recession.
Growing support for small business comes as the US Treasury reports that the top nine banks bailed out by taxpayers have been making fewer and fewer small business loans. Policymakers are considering shifting some of the big bank bailout funds to a new pool of money earmarked for small businesses.
Small business continues to grapple with a reduction in capital, contributing to continued poor economic expectations. Never have small businesses been so pessimistic about the future for so long, according to surveys conducted by the National Small Business Association.
Fortunately, the SBA and other government agencies are working to improve the economic outlook for small businesses.