Obama Signs $30 Billion Small Business Lending Bill

Earlier today, the President Obama put his John Hancock on a $30 billion small business lending bill intended to spur economic growth among, well… small businesses.

In addition to the fund set up to loan money to these businesses, the bill also includes $12 billion in tax breaks for small companies.

Said Barry O:

It was critical that we cut taxes and make more loans available to entrepreneurs… So today after a long and tough fight, I am signing a small business jobs bill that does exactly that.

Those in favor of the bill claim it will open up currently closed lines of credit to smaller companies and create half a million new jobs.

Obama signs small business bill into law [Reuters]

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  1. digital0verdose says:

    This is good news.

    • ShruggingGalt says:

      No it’s not.

      Hidden in the bill the Federal government has DOUBLED the penalties for ‘errors’ on information returns.

      Meaning you forget to cross a “t” on a 1099 (one letter mismatch with SSA records) and you’ll be fined $30 for each one.

      And previously enacted legislation (the Paypal bill) mandated that the IRS consider only ONE defense for that. And that is if the eVerify system is wrong, and you go by that system when creating 1099s.

      This is going to be a nightmare for small businesses, especially since they’re going to have to start sending a 1099 to everyone they pay more than $600, even if they are incorporated!

  2. Cry Havoc says:

    It’s Herbie Hancock, durrrrr.

  3. Consumeristing says:

    Why didn’t the $30 billion come from the $800 billion stimulus?

    • Loias supports harsher punishments against corporations says:

      Because those funds’ use is already stipulated by law. It may not be eligible for such a use.

      I don’t know this as fact, but just a theory.

    • apd09 says:

      because that money was earmarked for banks who had issues with bad mortgages and also for shovel ready projects that did nothing but make politicians look good but did not actually create any jobs. It has always been the small to mid size businesses that needed help but all of the other stimulus initiatives did not focus on them. You can’t create jobs if companies aren’t hiring. Giving money to states to use to build roads and infrastructure was not going to make banks give money to a business, and that is where the first stimulus was fundamentally flawed and what the government did not take into account. Or at least those in the majority at the time did not take into account.

      • PunditGuy says:

        Cite your studies, at least. The CBO disagrees with you, and they looked at actual data.

      • ARP says:

        Seems that most economists seem to disagree with you that the stimulus saved/created jobs.

        http://www.tampabay.com/news/politics/stateroundup/politifact-stimulus-created-private-sector-jobs-in-florida-unlike-scott/1122712

        http://thehill.com/blogs/on-the-money/801-economy/99915-cbo-finds-stimulus-bill-boosted-job-growth

        I’m also wondering who worked on all those “shovel ready” projects if not employees of local or state government or private companies.

        • apd09 says:

          shovel ready projects do not create jobs for the college educated people who were laid off when the financial market collapsed. that was my point. The shovel ready jobs helped get jobs out there but did nothing to actually help the small business or mid size business that was not able to survive. For all of the people who are unemployed right now the stimulus was not aimed at them, it was aimed at government entities not private.

          Do you understand?

          • ARP says:

            I’m sorry, I took, “…that did nothing but make politicians look good but did not actually create any jobs” to mean that you thought the stimulus “did not actually create any jobs.” Aparently it doesn’t mean what it says its means.

            /snark

            I (partially) agree with you. The stimulus was primarily a 1930’s solution to a 2009 problem. They do have some money for green energy, but not nearly enough to create sufficient white collar jobs because they didn’t think the benefits would be fast enough. If they wanted to fix the economy for the long term, they could have put a huge chunk of money into green energy and tech. That would have reduced our costs of wars and foreign policy, energy subsidies, environmental damage, etc. Of course it would have taken years to feel the effects and so wasn’t politically viable.

          • Gulliver says:

            Wait, so road crews who work for a private firm are not employed now? Companies making cement, ashphalt, road equipment see no benefit? I guess the money that the “government employees who KEPT their job don’t spend money at restaurants, grocery stores or the mall? They don’t buy cars or pay taxes either. I guess you aren’t an economics major

            • apd09 says:

              http://www.bls.gov/eag/eag.us.htm

              the stimulus did not do enough to create permanent jobs, all of these shovel ready projects were a bandaid. In 2 years or whenever the work is done if the economy has not turned about then all those people are going to be out of work again.

              I guess you are not an economist either and able to extrapolate and forecast.

              Looks at the numbers, all the stimulus did was stop people from losing some jobs but it has not lived up to what it promised and it did not do anything for the average american struggling to make ends meet. Accept reality, accept what the US is like today, and ask any person who is unemployed right now if it helped them.

              But oh no, that would be too hard, its easier to make snarky responses and not see the big picture.

    • Abradax says:

      The slush fund has to stay available to buy favors.

    • Gekas says:

      Why does it matter what the gift horse’s mouth looks like?

  4. Wang_Chung_Tonight says:

    being the awesome american I am, I will adopt my country’s methods of getting out of debt.

    I will be opening 3 more credit cards and spending as much as I can.

    will keep you posted.

  5. apd09 says:

    Cue comment about other people ready to cue up comments about Obamanomics or other political rhetoric in 3… 2… 1…

    Seriously, enough with the silly cue up comment comments.

    • denros says:

      I’m really confused, there must be more than one Obama guy working in washington DC. Everybody’s always talking about how he’s going to hurt small business. And this OTHER obama guy wants to give them money. What’s a confused voter to do? I think that “fair and balanced” news channel can probably help me sort this mess out, they sound trustworthy right?

  6. massageon says:

    Unfortunately, the most economic growth is born from large businesses, not small. The large corporations are the holders of the most jobs and the ones who spend and earn the most money. This is like a pebble in the ocean, it will affect some but not enough to make any real difference.

    • digital0verdose says:

      This was a way of countering one of the arguments Republicans have been providing for re-upping the Bush tax cuts that are going to expire in Jan.

      The Reps have been saying by not upholding those tax cuts, Obama is trying to screw small businesses. This bill takes care of that and knocks one of the legs out from underneath the Bush bill which is essentially just a way to give the extremely wealthy a way out of paying as much on taxes.

      • frank64 says:

        The Republicans want to give tax breaks to everybody, not just the rich. The Dems just focus on the small amount that is for the rich. The tax breaks the Dems want to give will cost 2 trillion over 10 years, far more than the 800 billion for the rich.

        I wish we had a flat tax with a fixed deductible, then there would be some progressiveness, and the class warfare we have now would be reduced. Then we can focus on the cost/benefit of all our spending.

        • digital0verdose says:

          Where did you get those awesome numbers?

          • denros says:

            The same place rush limbaugh gets his cholesterol checked, apparently.

            • frank64 says:

              Those numbers were on the network talk shows, such as Meet the Press. They are good numbers. This week the Dems have been using the 800 Billion number, but NOT the 2 trillion number. Linking a fact with a boogie man is a good tactic, it does not change the argument, but it is a good tactic.

              I can’t find the number is a quick search, because I have to leave, but they are around, if you disagree, what is the cost of the middle class tax cuts?

              • magus_melchior says:

                How do you know they’re good numbers if (a) your sole source is MTP (in which case the source could be anything, especially if a panelist spouts it out of thin air– and if your entire basis for the number is MTP, that’s called an argument from authority), and (b) you can’t find confirmation?

        • ARP says:

          I think you have a few things wrong.

          1) The Dem’s wanted to keep the cuts for the middle class. R’s decided it should be all or nothing and threatened to filibuster if they didn’t get them. So R’s believed that if the rich don’t get cuts, nobody should get cuts.

          2) Your math is so backwards, I’m not even sure how to respond. Letting the tax cuts expire, will reduce the deficit. Letting the tax cuts expire for the wealthy only, will reduce the deficit (by less). Renewing the tax cuts would cause the deficit to explode (worse) And don’t even start with the “cutting taxes results in more tax receipts” argument. Reagan and Bush both argued that and it doesn’t work in practice. Repeating it doesn’t make it so

          http://www.washingtonpost.com/wp-dyn/content/article/2010/09/20/AR2010092005699.html

          http://finance.senate.gov/imo/media/doc/071410Lbtest.pdf?loc=interstitialskip

          http://www.factcheck.org/askfactcheck/have_tax_cuts_always_resulted_in_higher.html

        • Awesome McAwesomeness says:

          Yes, but the tax breaks for the middle class will be fed back into the economy, unlike the rich. Trickle down with the rich does not work, period. The middle class and poor, however, love spending money and that tax cut will boost the economy.

      • rooben says:

        Is it just me, or does anyone else think that employees are OPEX, thus tax deductible? Cessation of the bush tax cuts should have no impact on hiring, since those are on income taxes (and for gambling w/ Wall Street). If a business was planning to hire people, they do so before the end of the fiscal year, and that money spent reduces their income, and reduces their taxes.
        What the end of the Bush tax cuts would slow are CAPEX, like buying new equipment etc – that would come from post-tax income.

    • apd09 says:

      but remember the trickle down effect of a small business, the more small business that are doing well means more accountants, more electricians, more of many other jobs in the economy in general being stimulated. At this point a large corporation has an accountant in house, they usually have a head maintenance technician, and lots of other stuff they keep in house as opposed to using other small businesses.

      The problem with small business is that unless people actually buy from the small business there is not much economic stimulation that can be achieved just people holding on. There is no reason to hire someone if your revenue will not be able to increase.

      That is my biggest issue with the government and their economic stimulus planning, they seem to be giving money to everyone but the people are need to start spending money to create the demand and the need for more jobs. Instead they are going to raise out taxes and take more money off the street which will only further damage the fragile economy.

      • rooben says:

        This.

        Except – those shovel-ready jobs would help the white-collar workers, as long as they are willing to get their hands dirty.

        Infrastructure projects are HUGE for small businesses, as they are the ones who (used to) get the government contracts, then feed into the economy (sounds like you know, they hire accountanting firms, lawyers, etc etc)

      • RvLeshrac says:

        But the other half of the government, also including the teabaggers, is convinced that the only people you need to help are the hyper-rich, the top 1%, who aren’t going to spend any of their money.

        In the absence of a greater good, you don’t have much choice but the lesser evil.

    • daveinva says:

      Your government appears to disagree with your facts.

      http://www.sba.gov/advo/stats/sbfaq.pdf

      • Represent 99.7 percent of all employer firms.
      • Employ half of all private sector employees.
      • Pay 44 percent of total U.S. private payroll.
      • Generated 65 percent of net new jobs over the past 17 years.

      But other than that, you’re right :-).

      • kujospam says:

        “Represent 99.7 percent of all employer firms.” but that is meaningless really. The number has not effect on anything. It is really pointless to even list it. Would it matter if it was 1%, would it matter at 50%? That number by it self is meaningless.

        • MongoAngryMongoSmash says:

          44.7% of all statistics are made up on the spot.

        • PTB315 says:

          Am I not understanding what that statistic means or is in regards to? To take the context from the link:

          “How important are small businesses to the U.S. economy? Small firms represent 99.7 percent of all employer firms.”

          … Now I see how that could be misunderstood. The number that 99.7% refers to is how many companies that have employees exist. If you had 100 companies, 99 being small businesses with no more than 100 employees, and GE is the 100th firm, then that number is misleading. GE employed 316,000 people in 2005 (Globally I believe, not just US).

          However, “Employ half of private sector employees” and “Pay 44% of total US private payroll” are both very significant facts. Those give the 99.7% a bit of context, you know how many of all firms are considered small business, and the employment and wages they’re responsible for compared to big firms.

  7. Macgyver says:

    He can give small businesses 30 billion, but he can’t sign a bill to extend unemployment.

    • apd09 says:

      Go on welfare, then you don’t need to worry about them cutting off you.

      I am with you I think it is silly that after 99 weeks if you can’t get a job you are cut loose, especially when there are people who get welfare and never have to try to get off it.

      You are not going to be able to provide for a family making minimum wage at a part time job and it is really hard for people to find full time positions right now especially those people who worked in factories and have not other job skills other than manning an assembly line.

      As much as ageism is illegal it also is part of the thinking of companies where they are not going to hire a 45-50 year old person who could cost the company money through health insurance when they can get someone younger who will not have the health problems.

      • PunditGuy says:

        http://www.urban.org/publications/310904.html

        Federal reforms in 1996 eliminated the entitlement to welfare and limited benefits to a maximum of five years in a lifetime. States can exempt up to 20 percent of their caseload from the federal time limit. Moreover, they can extend the time limit beyond five years, as long as benefits are paid with state dollars. In 2002 only two states—Michigan and Vermont—did not have any type of time limit on benefits (Bloom, Farrell, and Fink 2002). Seventeen states had time limits of less than five years.

    • ARP says:

      They passed the extension a few months ago. I imagine it will be coming up again, but will not pass since the Republicans will likely retake the House. This is also different since this is a loan and so they’ll hopefully recover some/most of their money (much more than payroll taxes on UE benefits).

    • Gekas says:

      I think the idea is to get people working.

  8. Xenotype51 says:

    Related Post: Study Say Small Businesses Hurt Economy.

    palmface

  9. daveinva says:

    Here’s a suggestion: instead of loaning $30B to small businesses, why not eliminate $30B worth of onerous regulations on small businesses?

    The former isn’t sustainable; the latter, however, is a gift that keeps on giving.

    • ARP says:

      What regulations would those be? Also many regulations are actually imposed by the States.

    • DH405 says:

      Yeah, like that onerous “minimum wage” BS. And taxes. And workplace safety.

    • magus_melchior says:

      Someone’s been listening to Meg Whitman (or similar voices on the Right)…

      The problem isn’t “onerous regulations”. If it were, then the Bush years would have seen far more growth in employment, and it would have probably mitigated the panic in 2008. On the contrary, job growth was anemic compared to previous decades, and really crashed in ’08, years after regulations were either stripped from the law or were administered by people who were actively encouraged not to enforce the regs.

      I hope I don’t have to bring up the BP spill, Massey Energy, etc…

  10. dolemite says:

    I just think it’s ironic it takes 30 billion to generate 500k new jobs.

    Maybe not ironic…sad may be the better word.

    • dangermike says:

      “Wishful Thinking”

      I believe that’s the term you’re looking for.

    • adamstew says:

      Why is that sad? That sounds about right to me… $60,000 per job created. sounds like a modest $35,000-$40,000 in salary, plus benefits, employment taxes, equipment, facilities, overhead and profit to the company providing the job.

      • thor79 says:

        Why is it sad? Because we’re in a deep hole Obama and the Dem congress put us in financially. And to get out their solution is to spend more money. Yeah real smart.

        • magus_melchior says:

          “Because we’re in a deep hole Obama and the Dem congress put us in financially.”

          Horse hockey. Bush 43 reduced revenue through big tax cuts and spent over a trillion in the Middle East in 2 wars. Both were conducted cheerfully under a Republican White House and Congress.

          How, precisely, did Obama “put us in the deep hole”?

  11. Extended-Warranty says:

    It’s a shame that Obama is falling into so much bad press. This is a really good thing and I feel he is moving us into the right direction. I’m also appreciative for letting the tax cuts expire for the rich (notice how I didn’t say raising taxes).

    Most people are listening to the lies that letting these cuts expire will hurt small businesses. Less than 2% of small businesses earn over $250,000 in profits.

    • pz says:

      Like I heard on NPR, if you want to criticize Obama and the Democrats, criticize the fact that they should’ve focused on the economy first, HCR second. Though, maybe they felt that undoubtedly the economy IS going to get better with time, but the window for enacting HCR was very, very slim, and might never come up again.

    • nybiker says:

      Well, the small business I used to work for hasn’t even had 250,000 in revenue, let alone profit, in the past 2 or 3 years (I was laid off in Jan 2009).

    • dolemite says:

      I agree…Obama gets a bad rap for the “bailout”, but he wasn’t the one that got us into this mess. Fighting a 3 trillion + double war on 2 fronts, housing mess, wallstreet crash…

      I believe he did more actual work in his first 2 years than Bush did in 8. People criticize him for going on vacation for 1-2 days, when Bush spent months upon months at the ranch.

  12. framitz says:

    Would be a good thing except for the bureaucratic nonsense, corruption, and greed that will result in maybe 1 billion actually doing any good (except of course, for the crooks).

  13. Consumeristing says:

    This is why I’m giving up on all this eye-catching budget-busting spending. There seems to be no thought and competence applied to the application of any of this spending. The country is run by the underpants gnomes.

    “But nonfarm payrolls are still down 329,000 from their level at the recession’s official end 15 months ago, and the slow growth in recent months means that the unemployed still have a long slog ahead.”

    http://www.nytimes.com/2010/09/21/business/economy/21econ.html

  14. coffee412 says:

    Most business agree that getting credit is not a problem and they are not in the market for more credit. The problem is that things are so uncertain in the USA that they are not expanding. This means they are not hiring. They are shrinking if anything. So, The 30 billion aid package really doesnt help at all. Talk about “having no idea whats going on”, This will just give more money to those that are looking to steal it. Another fantastic job of our Goverment here.

    • rooben says:

      you got it. Jobs come from expansion of demand. No smart business would hire people before the demand goes up. Once the resources you currently have are over-used (you start having to require overtime), THEN you start thinking of hiring…and only if your overtime spending costs more than the total cost to hire somebody.
      So, giving access to loans…No thank you, not unless I see a lot of demand, and I don’t have the cash (yet) to meet that demand.

      Demand comes from….people having more money…which comes from jobs…so HOW do you create jobs BEFORE there is demand?

      Underpants. Either that or government spending.

  15. galm666 says:

    That’s where the jobs are generated at – the small business level. But of course, some will scream that it’s more money spent even if taxes are low and lowered taxes are essentially spending anyways…

  16. KlausKinsky says:

    So what specifically *are* the tax breaks?? Can’t find any mention of them.

  17. H3ion says:

    I believe the act uses the SBA definitions of small business, which depend on the industry one is in.

    http://www.sba.gov/contractingopportunities/officials/size/table/index.html

  18. RogueWarrior65 says:

    This is pretty much useless. The so-called tax cut includes “a cut on capital gains tax”. The reality of this is that a business only has capital gains if A) they sell a tangible asset such as equipment or property and B) they make a profit on that sale. Sales of products or services aren’t capital gains. That’s ordinary income and since most small businesses are S-corporations profits fall into personal income tax which if you make more than $250k are going to get hit with an additional 5% next year. Equipment rarely is worth more than what it was originally paid for and certainly the commercial real-estate market is in the dumper so basically this is nothing more than a talking-point. Furthermore, businesses don’t want to borrow money unless they are reasonably sure that they’ll be able to make the payments. Right now, most small businesses are in survival mode.

  19. Abradax says:

    Isn’t that what TARP was supposed to do?

  20. meyerpflug says:

    Isn’t “going into debt” part of the problem that got us into this mess in the first place?

    Why not let the Small Businesses keep a little more of the profit they can earn rather than give them a loan they can’t afford?

    Financing a business Is risky and with a SB, it usually includes your own home as collateral. Getting into debt to keep your business afloat can put you on a fast track to bankruptcy if you are not careful. Keeping the Bush era tax cuts would allow SB to keep afloat without that risk. Seems pretty simple to me.

  21. pot_roast says:

    Awesome! I will start myself a small business and get a slice of this pie. (That’s exactly what happens with programs like this…)

    We need a few more housekeeping businesses and hair salons, don’t we?

    Let’s see if these loans actually become available to begin with.