President Barack Obama signed into law Monday a bill that extends and expands tax breaks and other benefits to small businesses in an effort to encourage businesses to invest and grow.
The bill, called the Small Business Jobs Act of 2010, immediately extends certain provisions of the Small Business Administration Recovery Act, including lending to small businesses and eight additional tax cuts meant to spur investment.
It creates $55 billion in tax relief effective for this tax year and renews a loan program that provided low-cost loans to thousands of small businesses.
The bill cuts capital gains taxes on small business investment to zero, increases the amount of investment that businesses can write off on taxes, deducts health insurance costs for the self-employed and increases deductions for start-up expenses.
It also simplifies reporting certain deductions, like those for business cell phones, and reduces penalties on businesses that fail to report certain tax transactions by converting the penalty from a flat rate to a percentage of benefits.
The renewal will make loans immediately available to 1,400 businesses on waiting lists that have already been approved by their banks, and doubles the size limits of many of the most popular SBA loans.
In another effort to promote lending, the bill creates a Small Business Lending Fund designed to help small banks lend to small businesses.
In remarks at the signing, President Obama described the bill as “the most significant step on behalf of our small businesses in more than a decade,” and promised that it would bring immediate relief to small businesses.
The president also thanked supporters from both sides of the aisle who helped push the bill through, but couldn’t resist a barb to Republican senators that blocked the bill for months.
“I regret that this was blocked for months by the Republican minority in the Senate, and that needlessly delayed this relief,” he said.
Small businesses, or businesses with fewer than 500 employees, are pointed to by both parties as the engine of economic growth in America.
Small businesses account for 65 percent of new jobs created in the past 17 years and employ about half of the nation’s private sector work force, according to the US Department of Commerce.
They also provide half of the nation’s non-agricultural, private gross domestic product gains.