Small Business Lending Bill Headed Toward Vote
WASHINGTON — Community banks would be able tap a $30 billion government fund to help them increase lending to small businesses under a bill working its way toward a vote in the Senate.
Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. The fund would be available to banks with less than $10 billion in assets.
Democrats and Republicans were negotiating a handful of amendments Wednesday with the goal of scheduling a vote on the bill later in the day. The talks played out as President Barack Obama traveled to Edison, N.J., where during a visit to a sandwich shop he urged the Senate to abandon partisanship long enough to pass the bill.
“Everywhere I go, I hear from small business owners who simply cannot get the credit they need to hire and expand,” Obama said. “And we’ve been hearing from smaller community banks that they want to lend to these folks but need more capital to do it. The initiatives in this bill will help them meet those challenges.”
The measure is part of a bill that would also provide a series of tax breaks aimed at small businesses. The House passed a bill establishing a similar lending fund in June. “The bill increases access to much needed capital, encourages entrepreneurship and promotes equity,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.
Some GOP lawmakers called the lending fund another bank bailout that would do little to increase lending to small businesses. The measure overcame a Republican filibuster in the Senate last week.
Republicans are hoping to add a handful of amendments before voting on the final bill. One would repeal a new tax reporting requirement for businesses that was included in the massive health care overhaul enacted last spring. The health care law requires businesses to report to the Internal Revenue Service the names and tax identification numbers of vendors that sell them more than $600 in goods in a year, starting in 2012. The information reporting is already required for the purchase of services.
The new reporting is designed to crack down on vendors that don’t report all their income, raising an estimated $17.1 billion in taxes over the next decade, according to the nonpartisan Joint Committee on Taxation. But Sen. Mike Johanns, R-Neb., called the requirement “One more mandate that stifles small businesses at the same time that Washington urges them to hire workers.”
Democrats, meanwhile, want to add about $1.5 billion in disaster relief for farmers who lost crops in 2009. The measure is being pushed by Sen. Blanche Lincoln, D-Ark. Democrats are also working on an amendment to settle long-running class-action lawsuits brought by black farmers and American Indians. One lawsuit concerned the government’s management and accounting of more than 300,000 trust accounts of American Indians. The other is a discrimination lawsuit brought by black farmers against the Agriculture Department.
The cost of settling the lawsuits is about $4.6 billion.
Senate Majority Leader Harry Reid, D-Nev., met Wednesday with John Boyd, president of the National Black Farmers Association, and vowed to work for a settlement. The farmers’ case would cost about $1.2 billion. “I know there are too many still suffering from treatment of the U.S. government and we have an obligation to make things right,” Reid said.
The bill would combine about $12 billion in tax breaks aimed at small businesses with $1.5 billion for states to support small business lending programs.
There are tax breaks for restaurant owners and retailers who remodel their stores or build new ones. Other businesses could more quickly recover the costs of capital improvements through depreciation. Long-term investors in some small businesses would be exempt from paying capital gains taxes.
Much of the bill would be paid for by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire. Taxpayers who convert accounts this year would pay the taxes in 2011 and 2012, generating an estimated $5.1 billion.
