Small business lending bill is latest victim of partisan politics

A politician at a lecturn

The Small Business Jobs Act that would jump-start small business credit was stalled by Senate Republicans as Congress went on August recess. Think Stock photo.

The Small Business Jobs and Credit Act was proposed to deliver cheap capital to community banks for small business lending. Persistent high unemployment has put pressure on the Obama administration to do something about job creation. The Small Business Jobs and Credit Act was conceived for that purpose. However, partisan bickering prevented Congress from doing anything about the bill before it went on its August vacation. Politicians are expected to resume talks about small business credit and tax relief  in September. Meanwhile, an underused program designed to boost small business credit — the Small Business Association Arc Loan Program — expires in September.

Bill promotes small business lending and tax relief

The bill, also know as the Small Business Jobs Act, authorizes the creation of a $30 billion lending fund. CNNMoney.com reports that community banks, those with less than $10 billion in total assets do most small business lending. By pumping capital into community banks, the idea is it will get in the hands of businesses. The bill would also provide $12 billion in small businesses tax relief between 2010 and 2020. It increases SBA loan limits and extends loan incentives through the end of the year. To encourage entrepreneurship, it offers numerous small businesses tax cuts. And the bill provides $1.5 billion in grants to lending programs for broke state governments.

Politicians play games with small business credit

Chances of the Small Business Jobs Act being enacted before September ended with Senate bickering over a procedural dispute before the House recessed July 30. Bizjournals.com reports that action on the bill was delayed in the Senate because of partisan maneuvering by Republicans over amendments unrelated to boosting small business credit. Republicans used their “another bank bailout” talking point to oppose the $30 billion small business lending fund. Two Republicans even voted with Democrats to give the lending fund a filibuster-proof 60 votes when it was considered as a separate amendment. But Republicans were united in blocking the Senate from moving forward on the entire bill. They complained Democrats would not let them offer enough amendments to the bill.

Interest-free SBA Arc loan program expires in September

Small businesses that have managed to survive the credit crisis can still get a little help, for a little while longer. Rather than waiting for Congress to get its act together, they can investigate an SBA Arc loan. Helium reports that the SBA Arc Loan Program is only to available to established businesses and not start-ups, but it provides 100 percent guaranteed, interest-free loans of up to $35,000. Businesses dealing with immediate financial hardship that can show one year of profitability in the last two years are eligible for SBA Arc Loans. Businesses can take up to five years to repay the loan. Funds will be disbursed over a six month period. The SBA Arc loan program ends at the end of September.

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