The BRIDGE Act is an ingenious, fiscally sound mechanism for keeping billions in the hands of a group that makes the most efficient use of capital.

In an economy like ours, there is always debate about government intervention in the marketplace. But there's no denying that today at least some business groups need help urgently.

In lower Manhattan we have an entire population of 5,000 to 7,000 companies whose future is very much in doubt as a direct result of the terrorist attacks on the World Trade Center.

Meanwhile, down in Washington, just about every business interest group imaginable has lined up on the steps of the Capitol looking for a handout. Whenever a tax bill comes before Congress, the special interests have a free-for-all. But there's something particularly tawdry about the spectacle this time around.

Somewhere between the special-interest groups and the companies in dire need lies another group of businesses that don't fall into either category. I'm referring to the hundreds of thousands of small private growth companies that play a critical role in generating new jobs -- particularly during recessions. As we note in this month's special report on the state of the entrepreneurial economy (see " Cloudy With a Chance of Monsoons"), there are signs that this time around, growth businesses may not be able to serve as the economic shock absorbers they've been in the past.

Part of the problem has to do with what Douglass Tatum calls the "capital gap." Tatum is the founder and CEO of Atlanta-based Tatum CFO Partners LLP, which contracts out financial executives on a part-time basis to early-stage growth companies. He says that a while back he started noticing patterns of failure among small, profitable growth companies, as an increasing number of them began experiencing negative cash flow at an accelerating rate.

Like most start-ups, those companies had been launched with personal savings and credit-card borrowing, but the most successful of them needed a level of financing that institutions in the capital markets weren't able to provide. As a result, many emerging companies found themselves in a kind of no-man's-land when it came to financing their future growth.

Tatum took his concerns to Washington, D.C., where he worked with Representatives Jim DeMint (R-SC) and Brian Baird (D-WA) to come up with a solution: a limited tax deferral that would bridge the capital gap. Under the so-called BRIDGE Act, a company would be allowed to defer up to $250,000 of federal corporate income-tax liability when its revenues exceeded its average revenues for the two prior years by 10% or more. The amount deferred would have to be repaid, with interest, over a four-year period beginning two years after the deferral. To be eligible, a company would have to do its accounting on an accrual basis and have total annual revenues of no more than $10 million.

The BRIDGE Act, if passed, would reduce tax revenues by $2.4 billion in the first year but wouldn't cost taxpayers a dime over the long term. In fact, it's estimated that the government would wind up making $1 billion on the deal over 10 years -- and that's before factoring in any of the benefits that would flow from the hundreds of thousands of additional jobs that would be created. It is an ingenious, fiscally sound way to keep billions of dollars in the hands of a group that makes more efficient use of capital than any other group on the face of the earth.

No one was particularly surprised that the BRIDGE Act wasn't included in the House version of the stimulus bill, the Economic Security and Recovery Act, a $100-billion package that provides security primarily for future Republican Party fund-raisers. The good news is that, as I write this, the BRIDGE Act is getting some serious attention in the Senate, with the possibility of strong bipartisan support. By the time you read this, we'll know how Congress responded to a historic opportunity to devote a small fraction of the overall economic-stimulus package to ensuring that the "capital gap" doesn't become one very large employment gap.

George Gendron is the editor-in-chief of Inc.

Please e-mail your comments to