Larry Jones
September 20, 2010

In a victory for small businesses, which create most jobs in local communities across the nation, two Republican Senators, George Voinovich (OH) and George LeMieux (FL), teamed up with Democrats on September 14 to break a procedural roadblock that had stalled action on the Small Business Jobs and Credit Act of 2010, H.R. 5297, since July. The legislation will create an estimated 500,000 jobs that are badly needed to help put Americans back to work. On September 16, the Senate voted 61-38 to both end debate on the measure and pass the bill. The legislation is a priority of the Conference of Mayors, which worked closely with Senator Mary Landrieu (LA), Chairwoman of the Senate Committee on Small Business and Entrepreneurship, to urge passage of the legislation.

Under the legislation a number of incentives will be provided to encourage small business investments and job creation. A key feature of the bill is the creation of a $30 billion lending fund that is designed to increase small business access to badly needed credit. The fund will be used to make loans to small community banks with less than $10 billion in assets that provide loans to small businesses. As an incentive to get these banks to increase lending to small businesses, the dividend rate that they will pay back to the lending fund will decrease as they increase lending to small businesses relative to their 2009 lending level. Banks that do not increase lending will face higher dividend rates.

The bill will also provide $12 billion in tax cuts, including deductions that will allow small businesses to write off half of the cost of their equipment purchases in 2010 and allow self-employed small business owners to deduct the full cost of health insurance for themselves and family members.

Landrieu included language in the final version of the bill that addresses a controversial IRS reporting requirement approved in the new health care law that requires businesses to file a disclosure form whenever they make payments to a vendor that exceeds $600 in a tax year. To ease the burden on businesses, the language in the final version will raise the threshold from $600 to $5,000.

Although the House passed its version of the bill on June 15, the measure stalled in the Senate when Republican members threatened to filibuster the bill due to their opposition to the lending-fund provision. The bill remained stalled until Voinovich announced last week that he would join with Democrats to produce the 60 votes necessary to shut off debate and force a final vote on the measure.

Because the two chambers adopted slightly different versions, the measure approved by the Senate was sent to the House for a final vote before it is sent to President Barack Obama to be signed into law.