For all the talk about the 20 percent tax on unrealized gains, dubbed the "Billionaire Minimum Income Tax," some lesser-known yet eminently helpful things may actually await entrepreneurs in President Joe Biden's $5.8 trillion 2023 budget proposal, unveiled this week.
Chiefly, Biden's request would allocate roughly $914 million to the Small Business Administration, the agency tasked with providing capital access and other resources to the country's small businesses. To compare, the budget request for the SBA clocked in at $852.5 million during FY22 and $819 million for FY21.
During the depths of the pandemic, the agency helped channel more than $1.1 trillion in aid to U.S. small businesses through various programs including the Paycheck Protection Program, a $750-billion forgivable loan program, and the Restaurant Revitalization Fund, a grant program for food-service businesses. During FY21, the SBA's lending authority reached $44.8 billion across its traditional lending programs.
The Biden administration has already made some of its plans for those funds known. Last November, the White House committed to helping small, disadvantaged businesses secure more federal contracts by increasing its 2022 federal contracting goal from 5 percent to 11 percent. With Biden's support, the SBA has also made strides to cobble together what Covid-related relief it can, most recently extending the deferment period for its disaster loan program and expanding its community advantage pilot program.
And should the federal budget pass in its current form, more assistance for entrepreneurs is on the way. Here are five areas small businesses should keep an eye on within the current budget proposal:
1. Fighting climate change:
The budget allocates $10 million to help small businesses join the fight against climate change. The money is meant to help spur access to capital for investments that would assist small businesses in going green -- something that's top-of-mind for regulators like the Securities and Exchange Commission. The SEC recently proposed a rule for public companies to disclose greenhouse gas emissions, and investors are increasingly becoming more focused on environmental, social, and governance (ESG) factors.
2. Helping veterans get certified:
The budget provisions $20 million for a certification program to help small businesses owned by veterans access more opportunities across the government. Attaining this certification status can open up more business opportunities, such as through government contracting.
3. Aiding under-served entrepreneurs:
The budget aims to set aside an additional $31 million to help under-served entrepreneurs, which includes increasing access to mentors, training, and counseling services. The SBA received $272 million in appropriations for FY22 for its Entrepreneurial Development programs.
4. Amping up domestic manufacturing:
To strengthen domestic manufacturing, the budget would dole out $30 million to invest in growth accelerators, regional innovation clusters, and the Federal and State Technology Partnership Program. The FAST program helps organizations facilitate state and regional programs aimed at increasing proposals and awards in research, development, and innovation. Another $4 million is set aside to create a manufacturing hub, so that the SBA would have more power to connect small businesses with key manufacturing resources and enter new markets.
5. Expanding access to capital:
Access to affordable capital continues to be a challenge for many entrepreneurs, which is why the budget proposes to increase lending authority at a handful of programs by $9.5 billion. Such programs include the agency's 7(a) loan guarantee program, an attractive vehicle for lenders given that the SBA guarantees up to 85 percent of the loan amount. Other expansions apply to the 504 loan program, which provides long-term fixed rate loans of up to $5 million toward the purchase of real estate, among other things. The expansion also increases lending levels to the Small Business Investment Companies, which are privately owned companies licensed by the SBA that invest in small businesses, and the Secondary Market Guarantee program, a secondary market for SBA-backed loans.