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SBA loans, tax bill boost businesses

By Joyce M. Rosenberg

The Small Business Administration is seeking more lenders for a program that links small companies to nonprofit organizations that can grant loans.

The Intermediary Lending Pilot Program provides long-term loans of up to $200,000 to small businesses.

Under the program, the SBA lends as much as $1 million each to what are called intermediary lenders. These organizations help pay for start-ups and small businesses.

In the first phase of the program, which was launched last year under the Small Business Jobs Act of 2010, the SBA approved 20 intermediary lenders in California, Colorado, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, North Carolina, Ohio, Pennsylvania, Virginia, South Dakota, Texas and Washington. The SBA now is taking applications for 20 more lenders. If Congress approves more spending, the SBA plans to seek 20 additional lenders next year, for a maximum of 60.

The SBA lends money to the intermediary lender for a 20-year term at 1 percent interest.

Like SBA’s other loan programs for small business, companies that want to borrow under the intermediary lending program must have been unable to obtain a loan elsewhere. They have to be able to show that their businesses have the means to repay a loan.

However, unlike the SBA’s 7(a) program for start-ups and small businesses, a company owner does not have to show that he or she has personal financial resources that could be used to repay a loan.

Information about the Intermediary Lending Pilot Program and an application to be a lender are on the SBA’s website. Applications must be submitted by May 25.

A tax cut to nowhere?

The House last Thursday passed the Republican-sponsored Small Business Tax Cut Act, but don’t count on it becoming law. It’s expected to die in the Senate.

The bill would let businesses with fewer than 500 employees take a tax deduction equal to 20 percent of their active business income this year. That income is money companies make from their operations rather than investments.

The Democrats who control the Senate oppose the bill because they say it would offer tax relief to companies that don’t need it. Any company with fewer than 500 workers would be able to take the deduction. The White House also warned that President Barack Obama would veto the bill if the Senate passes it.

Thursday’s 235-173 vote in favor of the bill was largely split along party lines. Some observers say the bill, having been introduced in an election year, is primarily an attempt to show the Republican Party’s support for small business.

Democrats have their own tax-cut bill in the Senate. It would give small businesses a 10 percent credit on their 2012 income taxes if they hire new workers or raise wages. It also would restore a tax deduction for equipment purchases that expired at the end of 2011.

Joyce Rosenberg is a small-business columnist for The Associated Press.

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