The small business aid package supported by the marine industry finally cleared the Senate and should be approved by the House as you read this.
If it seems like we’ve been pursuing this bill for months, we have. Interestingly, the bill enjoyed bipartisan support when first proposed by President Obama last spring. But, the addition of a $30 billion small business lending fund to give credit-starved small firms access to capital triggered partisan division. Senate Republicans labeled it “mini-TARP” and filibustered. At last, however, it’s a done deal and it still includes the $30 billion for community banks to boost lending as well as $12 billion in tax breaks to encourage small businesses to invest and hire.
So, should we in boating be taking a victory lap? Maybe a slow one. Sure, the lending fund increases the possibility marine businesses can get access to capital locally. Yes, MRAA and NMMA successfully lobbied for lower SBA loan program fees and substantially higher loan guarantee and lending limits. However, any real impact on problems like floorplanning and working capital for boat dealers remains to be seen. After all, previous programs run through SBA in the name of helping small businesses have failed the marine industry. Still, here are some provisions in the bill that might help you:
• Increases SBA 7(a) loan limits from $2 to $5 million, 504 loans from $1.5 to
$5.5 million, and microloans from $35,000 to $50,000, all of which the marine industry pushed for. It also increases the guarantee on 7(a) loan limits and eliminates borrower fees on 7(a) and 504 loans through December 31, 2010.
• Increases SBA 7(a) Express Loans from $300,000 to $1million for working capital to small businesses.
• Eliminates the fees normally charged for loans through the SBA 7(a) and 504 loan
programs and increases the government guarantees on 7(a) loans from 75 percent to 95 percent.
• Tax relief by increasing “Section 179 Expensing and Expansion to Certain Real Property.” The bill increases the thresholds for deducting capital expenditures to $500,000 and the phase-out threshold up to $2 million for the taxable years 2010 and 2011. Within the higher thresholds, the bill allows expensing up to $250,000 of the cost of qualified leasehold improvement property and qualified retail improvement property.
• Extends the bonus depreciation provision to recover the cost of capital expenditures in the first-year at 50 percent depreciation for qualifying property purchased and placed in service in 2010.
• Allows deduction of health insurance when calculating self-employment tax. Currently, owners can’t deduct health insurance for themselves and family. This provision allows deduction for health insurance incurred in 2010. (Not thereafter.)
• Extends the one-year carryback for general business credits to five years for sole proprietorships, partnerships, and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years.
• Expands the use of general business credits against AMT. Currently, only allowable general business credits can be claimed against regular tax liability, and only to the extent regular tax liability exceeds the AMT liability. (A few credits may be used to offset AMT liability, such as the credit for small business employee health insurance expenses.) This bill allows small businesses to use all types of general business credits against the AMT for sole proprietorships, partnerships, and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years.
There are other provisions in the bill that may prove helpful to dealers. And while it’s impossible to predict the ultimate impacts it may have, it is generally positive . . . and anything positive coming out of Washington these days needs to be highlighted!