US President Barack Obama greets employees as he orders ice cream during a surprise stop at Deb's Ice Cream and Deli in Cedar Rapids, Iowa, July 10, 2012. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/GettyImages)
WASHINGTON (WUSA) -- Obama administration Tuesday announced additional initiatives that intended to raise the amount of investment that small businesses can expense next year.
Five of these initiatives are "immediate executive actions that will accelerate Federal payments, reduce paperwork, and make it easier for small firms to access loans and tax credits," a White House statement said.
Obama's action to push small businesses comes right after his call for an expiration of the George W. Bush tax cut for families making more than $250,000 a year, with a one-year extension of tax cut for families that make less than $250,000 a year. For two days, House Speaker John Boehner and Ohio Sen. Rob Portman have been opening fire on the President that his staff is damaging the nation's economic recovery by raising taxes on small businesses.
"Why we would want to tax the people that we expect to create jobs in this country makes no economic sense," Boehner said. "The president can't run on his record because his policies, his economy policies have failed and have made things worse. And as a result, he's turned to the politics of envy and division. That's what this is about, nothing but pure politics."
The small-business package is the response to GOP's accuses of being unfriendly to small businesses and entrepreneurs. White House said that the Obama Administration already "has worked to enact 18 small business tax cuts and numerous measures to help more small businesses access the credit they need to invest, hire, and grow". President Obama said from the White House on Monday that 97% of small business owners fall under the $250,000 threshold, and therefore wouldn't see their taxes go up.
The White House provided more details on the small-business package as follows:
- Accelerate payments to small business subcontractors: Through the Office of Management and Budget, the President will direct agencies to make contract payments along an accelerated timeline to all prime contractors for the next year (typically 15 days after receipt of proper documentation, as opposed to 30 days), with the understanding that those prime contractors will similarly accelerate payments to their small business subcontractors.
- Announce support for Section 179 expensing at $250,000 for one year (requires legislation): President Obama is calling on Congress to let small businesses write off up to $250,000 in capital investments in 2013, such as machinery and equipment, to drive productivity. This builds on the President's proposal for 100% expensing for all firms in 2012. Because an increase in Section 179 expensing was part of the 2001 / 2003 tax cuts, this proposal is included in the President's call for extending those tax cuts for the middle class next year. Without that extension, the expensing limit for small businesses is scheduled to decline to only $25,000 in 2013.
- Increase access to capital through SBA's Small Loan Advantage (SLA) 2.0: SBA is re-launching Small Loan Advantage, one of its key small dollar loan products, as SLA 2.0. This revamped program raises the maximum loan amount from $250,000 to $350,000, streamlines the loan process, and makes it easier for lenders to extend loans to small businesses across America.
- Launch "Quick App" for surety bond guarantees under $250,000: SBA is launching "QuickApp," a streamlined application that will eliminate the need for contractors to complete five unnecessary forms to apply for surety bonds. Providing small firms, particularly in the construction industry, streamlined access to these bonds will make it easier for them to compete for and win additional business, which is important to allowing them to expand and create jobs.
- Reduce paperwork for SBA's Disaster Loan Program: Cutting the online application from 80 screens to three or four screens (depending on loan type) will allow families and businesses easier and quicker access to support for rebuilding after a disaster.
- Align New Markets Tax Credit with the needs of investors in growing small firms: The Obama Administration is working on a set of regulatory reforms to the existing New Markets Tax Credit that will make it easier for community development entities (CDEs) to attract private sector funds for investment in startups and small businesses operating in lower-income communities. The forthcoming regulations are designed to encourage CDEs to invest in other types of small local businesses by relaxing the reinvestment requirements for CDEs investing in certain operating businesses. The Treasury Department is also considering regulatory reforms that would further simplify the requirements for these CDEs and intends to publish these for comment in the future.