Small Business Economic Stimulus Package Details

In March 2009, the Obama Administration announced a $15 billion economic stimulus plan to help small businesses. Here’s more about that economic stimulus package, in detail.

$15 Billion In Small Business Loans

The U.S. Treasury Department will buy up to $15 billion worth of the small business loans that are crippling community lenders and bankers. Typically, a local bank issues a loan to a small business, then sells it on the secondary market to a bigger bank. Because the bigger banks’ business came to a virtual halt in the fall of 2008 and hadn’t resumed by March 2009, the federal government decided to step in and buy many of the small business loans directly.

This infusion of capital should allow community banks to start lending to small businesses again, a move that could be vital to the economic recovery of America. In the past 10 years, small businesses accounted for 70% of the new jobs created. In 2007, the Small Business Administration (SBA) guaranteed almost 100,000 small business loans. In 2008, that figure had dropped by 30%.

SBA Guarantee Bumped From 85% To 90%

As another prong of the economic stimulus for small businesses, the guarantee on SBA loans was lifted from 85% to 90%, transferring more of the risk from the banks onto the shoulders of the U.S. government.

IRS Stimulus For Small Businesses

The IRS also contributed economic stimulus for small businesses, in the form of two rule changes.
•Corporations, partnerships, and sole proprietorships with gross receipts of less than $15 million can elect to carry back net operating losses for tax year 2008 for three, four, or five years.
•In 2009, small businesses owners who have adjusted gross incomes of less than $500,000 only have to make estimated tax payments based on 90% of the tax they owed in 2008, not 100% or 110%.