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Stimulus Money for Small Businesses


Definition: The Economic Stimulus Package provided money for small businesses. The FY 2011 budget allocated $64 billion, broken out as follows:
  • $33 billionin tax credits for small businesses that add new workers or give raises beyond a cost-of-living increase.
  • Raise the limit on SBA loan guarantees from $2 million to $5 million.
  • $30 billion from the TARP program for 8,000 community banks (assets under $10 billion), which do half of all small business lending.
  • $700,000 to eliminate capital gains taxes for investors in small businesses.
In 2009,stimulus money was made available to small businesses for the following:
  • Deductions for machinery and equipment, such as computer and office equipment, signs, and vehicles was raised to $250,000 (except SUVs which were limited to $25,000). Property that didn't qualify for the tax credit coulc be depreciated by 50%.
  • Investors in small, publicly-held businesses who held their stock for more than five years received a capital gains tax cut. Small businesses could delay paying the 3% withholding tax on goods and services sold to governments.
  • Small businesses that hired unemployed veterans and students who looked for work for more than six months received tax credits.
  • The Small Business Administration 7(a) loan guarantee was raised from 75% to 90% of the value of the loan. Fees were eliminated on the SBA's 504 program, which guaranteed $4 million worth of economic development loans to small businesses.
For more, see Benefits of the Economic Stimulus Package for Small Business from the About.com Guide to Business Finance, Rosemary Peavler.
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