Stimulus Money for Small Businesses

Small Businesses Received a Small Bailout, Too

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Although most of the media attention was on the $105 billion invested in large banks, the Treasury's TARP program also invested $92 billion to strengthen community banks across the country. These banks were supposed to use the funds to help small businesses in their local area. The Treasury reports tell you which were the banks near you. (Source: U.S. Treasury, TARP Program Transactions, 3/16/09)

Second, the Economic Stimulus Package included $54 billion in tax writeoffs for small businesses.

Here's the breakout:

  • 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 could 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.
  • Delay taxes for businesses that reduced their debt.
  • 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.

    The FY 2011 budget also allocated $64 billion, broken out as follows:

    • $33 billion in 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.