After weeks of debate, negotiation and squabbling, the stimulus package will finally hit the street.
President Barack Obama signed his economic stimulus plan today. He touted it as an immediate lifeline for struggling businesses across the country. "The businesses that are shedding jobs to stay afloat, they cannot afford inaction or delay," he said.
After weeks of appealing to members of the House and Senate to pass the bill, the two congressional houses settled on a reconciled version of the plan to hand to President Obama.
Embedded in the $787 billion stimulus package—which includes funds and relief allocated across various sectors—are some breaks for small business.
"We expect most of these provisions to be relatively quick moving," says Rep. Nydia Velazquez (D-NY), chairwoman of the House Small Business Committee, who voted in favor of the stimulus. In particular, she says that targeted tax relief measures should help small business owners in the short term.
For those small companies that have slumped recently but performed well in past years, the plan will allow them to file for cash refunds. Businesses with a net operating loss (expenses exceeding revenue) for this year could use the loss to offset profits made in the past five years, extended from two years, according to Barbara Weltman, an attorney who specializes in small business tax law. A last-minute change in the legislation limits this provision to businesses that make less than $15 million a year.
Those business owners who are in a position to buy new equipment, such as computers, refrigerators, or machinery, are in luck – the stimulus will allow them to immediately write off the cost of these purchases up to $250,000.
And in an attempt to thaw the frozen lending market that has made it difficult for many small businesses to get the capital they need, the stimulus includes measures to facilitate borrowing backed by the Small Business Administration including increased loan guarantees to appeal to risk-averse lenders.
"This should really help to open things up and to get the money flowing again," says Todd McCracken, president of the National Small Business Association, though he remains skeptical of whether that alone will be enough to jumpstart the economy. "It's a gamble," he says.
Many small business advocates are disappointed with what the stimulus plan does not include. Bill Rys, tax counsel for the conservative Washington D.C.-based National Federation of Independent Business says that the stimulus plan fails to address small business owners' most pressing needs. He had hoped for a six-month payroll tax holiday for employers. "That would really help to reduce the cost of labor," he says.
Direct breaks for hiring new workers were among various stimulus proposals that did not make their way into the plan. More hiring incentives would have markedly benefited small business in particular because, according to the SBA, small businesses have generated between 60 and 80 percent of the new jobs created each year over the past decade.
The stimulus should spur job creation though – if indirectly – through the funding of projects, especially those related to infrastructure and public works. For instance, legislators are allocating tens of billions of dollars to transportation projects, including highway, bridge, and mass transit construction and repair.
"A portion of those capital expenditures will be profitable for small business," says Giovanni Coratolo, director of small business policy for the U.S. Chamber of Commerce. But he's still unconvinced that the stimulus includes enough of these measures to make a real difference for most business owners. "It has certain aspects that will be helpful, but it's not a full course dinner," he says.