Small Business

A Look at Small Business Legislation in Congress

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Small business bills and proposals introduced in the first two months of the 113th Congress aren't the sweeping legislation seen in recent years — like last year's Jumpstart Our Business Startups Act — a law that aimed to give companies new ways to get investment money.

With the exception of a House proposal to change tax laws that affect small business, lawmakers have been targeting relatively narrow issues. That's because Congress is preoccupied with the federal budget deficit, and is avoiding legislation that would add to it, said Todd McCracken, chief executive of the National Small Business Association, a lobbying group.

"They're focused on things that don't cost money. It seems like they're nibbling around the margins a little," McCracken said.

Some of the new bills are reintroductions of legislation that died in the last Congress, or are revisions of existing laws.

Here is a look at some of the legislation that would affect small business:

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1. Small Business Taxes

The House Ways and Means Committee has put together a bipartisan draft of tax proposals aimed at helping small businesses. Most prominent is a proposal to increase and make permanent what's called the Section 179 deduction, which allows businesses to deduct equipment expenses. The draft also includes suggestions that the deduction for startup costs be doubled, to $10,000 from $5,000; that tax return filing deadlines be pushed back for small corporations; and that the tax differences be minimized or eliminated between two types of companies that have many similarities, partnerships and what are called S corporations. The committee released the draft for public comment. If it proceeds with the proposals, they could be part of an overall tax reform bill. Small business advocates generally welcomed the proposals, but some said lowering overall tax rates is a more important step that would help small business.

2. SBA Loans

Owners who want to use Small Business Administration loans to refinance mortgages would be able to do so under a bill introduced by members of the Senate Committee on Small Business and Entrepreneurship. The Commercial Real Estate and Economic Development Act would revive a law that allowed businesses to use a type of SBA loan known as a 504 loan for refinancing. Until the recession, 504 loans could only be used for property purchases or expansions. The refinancing provision was enacted to help owners strapped for cash, but it expired Sept. 27. Sponsors Sens. Mary Landrieu, D-La., and Jeanne Shaheen, D-N.H., say that reinstating the law would give companies more money to expand and hire.

3. Out-of-State Disaster Help

The Small Business Disaster Recovery Act clarifies that when a business is given a disaster loan of less than $200,000, the Small Business Administration cannot use an owner's primary residence as collateral if other suitable business assets can be used instead. The bill was introduced by Landrieu and Sen. Thad Cochran, R-Miss., after instances where owners were required to use a $300,000 or $400,000 home as collateral for a $200,000 loan although they had business assets to secure the loan. The bill also allows counseling centers called Small Business Development Centers to provide help to out-of-state companies that are located in federal disaster areas.

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4. Small Business Investment

A bill that would increase the amount of SBA-supported investment in small businesses was introduced by Landrieu and Sen. Ben Cardin, D-Md. The Expanding Access to Capital for Entrepreneurial Leaders Act would raise to $4 billion from $3 billion the authorization for the Small Business Investment Company Program. Under that program, investment companies licensed by the SBA invest in small businesses using money raised through SBA guarantees.

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5. Minimum Wage

An expected fight over an increase in the minimum wage — which many small businesses pay their employees — has already begun in Congress. During his State of the Union address, President Barack Obama proposed an increase in the federal minimum wage to $9 an hour from the current $7.25. Democrats from both houses on March 5 introduced legislation that would raise the minimum to $10.10, but it was defeated on Friday. Many small businesses with hourly employees — for example, fast-food restaurants and retailers — oppose a higher minimum because it would cut into their profits.

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6. Internet Sales Tax

Small retailers could be forced to collect sales tax on transactions made in states, where they're not physically located under a bipartisan bill introduced in the Senate. The Marketplace Fairness Act is an updated and consolidated version of three bills that died in the last Congress. The bill exempts retailers who have out-of-state sales of $1 million or less. That's up from $500,000 in past bills, a change made to satisfy opponents of the legislation who said it would be too much of a burden on small retailers to have to collect the tax. A similar version of the new bill has been introduced in the House.

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