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New Small Business Law Passes: What it Means

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By Tanya Roth, Esq. on September 28, 2010 7:09 AM

Claiming desperately needed good news for both his party and his country, President Barack Obama signed the new small business assistance bill into law today. When the nation is still struggling with a 9.6% unemployment rate, assisting the small businesses who are said to supply most of the jobs in the American economy is a must.

According to USAToday, small businesses were hit by a "one-two punch" in the recession, the President told the press on September 27. These companies faced not only reduced spending by consumers and a lack of demand for products, but at the same time, the financial crisis tightened the credit markets, making it harder for small businesses to get loans. This new small business law will help, the President said.

The new package contains eight business-oriented tax cuts, and accelerates existing loan programs. According to USAToday, some elements the new bill contains include:

  • The bill immediately extends the SBA Recovery Act provisions. In a few days, it will restart the SBA's Recovery lending, beginning with the more than 1,300 small businesses that have been waiting to get the credit they need.
  • Effective Monday, when small businesses buy new equipment, they may immediately write off the first $500,000 of that investment.
  • For eligible small businesses, some long-term investments in the company will be subject to zero capital gains taxes.
  • Entrepreneurs with a fresh idea will be able to deduct the first $10,000 of their start-up costs.
  • Those who are self-employed will be able to deduct 100% of the cost of health insurance for themselves and their family.

According to a report by Reuters, the Republicans opposed the bill, calling it a smaller version of the Wall Street bail out and blocked it in the Senate for weeks. Democrats say the small business law incentives could provide up to $300 billion in new small business credit and create 500,000 new jobs. "It's going to speed relief to small businesses across the country right away," the President said.

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