White House starts $21 million program to aid small businesses

David Cho of the Washington Post writes that in March 2009, President Obama vowed to address the drought of bank lending to small companies and announced an initiative to use $15 billion from the federal bailout to unfreeze the markets that finance Small Business Administration loans.

More than a year later, the program was finally launched — as a $21 million effort.

The program is one of several small-business lending initiatives developed by the administration that have struggled to get off the ground. Meanwhile, lending to these companies has fallen. Federal data show that lending to small businesses by community banks declined by about $8 billion, or 2 percent, between September 2008 and September 2009.

Administration officials say helping small businesses get credit remains a top priority. It is a critical component of the strategy to address the nation’s high unemployment. More than half of all U.S. workers are at companies with fewer than 50 employees. Without access to loans, many of these firms are laying off workers or shutting their doors altogether.

Obama’s economic team has put forward several major programs to increase small-business lending.

The first, unveiled in March 2009, focused on helping the SBA get loans into the hands of small businesses. This initiative proposed spending $15 billion to aid the markets that provide the financing for SBA loans. But in the months after the government’s announcement, these markets recovered on their own, administration officials say. As a result, there was no need for a more expensive program.

Officials at the Treasury Department decided to launch a tiny $21 million pilot version of the program last month, just in case SBA lending falls back into turmoil. If that happens, the Treasury could easily ramp up the initiative now that it is operational, officials said.

While the financing markets for SBA loans improved, virtually all other kinds of small-business lending remained troubled.

To address this broader problem, the administration in January proposed taking $30 billion from the $700 billion Troubled Assets Relief Program and offering that money to banks that lend to small businesses.

The aid would be given to these institutions at favorable annual interest rates, as low as 1 percent. The banks must show how they are using the funds to help small companies.

Administration officials also asked Congress to drop conditions attached to bailout funds, such as limits on executive pay, in order to encourage banks to take the money. They noted that hundreds of smaller banks last year did not take federal aid because of the stigma and the conditions attached to the funds.

Read more at: Washington Post

URGE YOUR SENATORS TO OPPOSE THE HEALTH CARE RECONCILIATION PACKAGE!

Yesterday, President Obama signed the Senate’s version of the health care bill into law. The next step is for the Senate to pass the Reconciliation Package which passed out of the House earlier this week.
 
The Reconciliation Act of 2010 contains increased penalties for non-compliance and requires employers to include part-time workers when determining whether their company qualifies as a small business. The Senate is currently debating the bill and will begin considering amendments shortly before voting on the bill. As you may recall, the bill only needs 50 votes (with Vice-President Biden as the tie-breaker) for passage.
 
Please contact your U.S. Senators TODAY to voice your opposition to H.R. 4872, the Reconciliation Act of 2010. Click here to send a personalized email to your senators or call the U.S. Capitol Switchboard is (202) 224-3121 and ask to speak to the legislative assistant handling health care in your state’s senate offices.  Phone calls, e-mails and faxes all work!

If you prefer to call your Senators, please use the following talking points provided by the National Restaurant Association on H.R. 4872, the Reconciliation Act of 2010: 

•  I am calling to ask Senator _____ to vote NO on the Health Care Reconciliation bill! (H.R. 4872)
• The legislation weakens the small business exemption, imposes severe administrative burdens, & includes extremely onerous penalties on small business owners like me. 
• The Senate-passed bill (H.R. 3590) included important protections for small businesses that rely on long-standing definitions of small business employment. 
• The changes made by the Reconciliation bill will include part-time workers in the employer mandate and increases penalties for uncovered workers.  That makes it unworkable for franchisees like me. 
• I am already operating on thin profit margins and trying to do what’s right for our employees.  But by imposing these onerous penalties and requiring small businesses to do this, you will add huge new costs and administrative obligations that I just can not take on, especially in these difficult times.
• Part-time employees are and have always been a large and essential component of our industry labor force. Many of our employees work for multiple employers to build a flexible work schedule, or receive coverage under another’s health plan. 
• I fear this new cost & burden will prevent us from maintaining and creating the jobs our economy needs to recover and the jobs that my business can provide. 
• I ask Senator ____ to Vote No on Health Care Reform Reconciliation!

Time is running out! Please do all that you can to protect your business from this harmful legislation!

Restaurants Face Big Changes with Health Care Reform

Paul  Frumkin writes in Nation’s Restaurant News that as President Barack Obama prepares to sign a sweeping health care reform bill into law, the foodservice industry faces changes of historic proportion.

In addition to requiring many restaurant operators to contribute to health care coverage for their employees, the newly passed Patient Protection and Affordable Care Act also makes menu labeling the law of the land.

The bill, HR 3590, which is expected to expand health insurance coverage to most Americans by 2014, was passed Sunday night in the U.S. House of Representatives by a narrow margin of 219 to 212. Obama has said he will sign it into law Tuesday.

“The National Restaurant Association opposed the bill that passed the House because it includes provisions that will impose tremendous burdens on America’s restaurants and hurt our industry’s ability to create and sustain jobs,” said Scott DeFife, the NRA’s executive vice president of policy and government affairs.

The International Franchise Association also voiced opposition to the measure.

“We support health care reform, but this bill does not reduce the long-term costs of health care and puts more regulatory burden on small businesses,” said David French, the IFA’s vice president of government relations. “The House-passed bill imposes a costly employer mandate, offers inadequate and unworkable tax credits to subsidize the mandated coverage and hides the true cost with an array of new taxes on small-business owners.”

Certain key details contained within the measure are subject to change if the Senate passes the House-passed budget reconciliation bill, which includes several final revisions to the law. And while Senate Democrats appear confident that they have the votes to shepherd the reconciliation measure through the chamber, observers in the foodservice industry acknowledge that Republican opponents could delay the process.

“It’s a very complex process, and there’s no guarantee it will pass,” said Scott Vinson, vice president of the National Council of Chain Restaurants in Washington.

The NRA said it would continue to press its case before the Senate with respect to provisions affecting the restaurant industry. The IFA also said it would continue to press for a rejection of the reconciliation bill.

“The reconciliation bill further increases taxes on small businesses and includes additional burdensome regulatory hurdles and costs,” the IFA’s French said. “We urge the Senate to reject the reconciliation bill.”

The measure Obama plans to sign would impact businesses with 50 or more full-time employees. The law states that employers would receive a 35-percent tax credit if they helped to insure their employees. However, they would have to pay a fee of $750 per full-time employee if they chose not to insure them.

 Read more at: Nati0n’s Restaurant News

HIRE Act Aims to Encourage Immediate Hiring with Tax Credits

The President recently signed into law the “Hiring Incentives to Restore Employment Act of 2010” (the HIRE Act, P. L. 111-47, 03/18/2010). The centerpiece of this Act is a payroll tax holiday and up-to-$1,000 tax credit for businesses that hire unemployed workers. In addition to these new hiring incentives, the HIRE Act also includes a one-year extension of the enhanced small business expensing option under Code Sec. 179 . Both of these provisions are extremely important to many businesses.

Payroll tax holiday and up-to-$1,000 credit for employers who hire unemployed workers. To help stimulate the hiring of workers by the private sector, the new law exempts any private-sector employer that hires a worker who had been unemployed for at least 60 days from having to pay the employer’s 6.2% share of the Social Security payroll tax on that employee for the remainder of 2010. A company could save a maximum of $6,621 if it hired an unemployed worker and paid that worker at least $106,800—the maximum amount of wages subject to Social Security taxes—by the end of the year. As an additional incentive, for any qualifying worker hired under this initiative that the employer keeps on payroll for a continuous 52 weeks, the employer is eligible for an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is reached, to be taken on their 2011 tax return. In order to be eligible, the employee’s pay in the second 26-week period must be at least 80% of the pay in the first 26-week period.

Workers hired after the date of introduction of the legislation (Feb. 3, 2010) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after March 18 receive the exemption for payroll taxes. Some additional features of the new hiring incentive include:

• The tax benefit of the new incentive is immediate. It puts money into a business’ cash flow immediately, since the tax is simply not collected in the first place.
• The tax benefit generally applies only to private-sector employment, including nonprofit organizations—public sector jobs are generally not eligible for either benefit. However, employment by a public higher education institution qualifies.
• There is no minimum weekly number of hours that the new employee must work for the employer to be eligible, and there is no limit on the dollar amount of payroll taxes per employer that may be forgiven.
• For workers that would otherwise be eligible for the Work Opportunity Tax Credit (i.e., another type of employment tax credit), the employer must select one benefit or the other for 2010. There is no double dipping.
• An employer can’t claim the new tax breaks for hiring family members.
• A worker who replaces another employee who performed the same job for the employer isn’t eligible for the benefit, unless the prior employee left the job voluntarily or for cause.
• For the hiring to qualify, the new hire must sign an affidavit, under penalties of perjury, stating that he or she hasn’t been employed for more than 40 hours during the 60-day period ending on the date the employment begins.
• The incentive isn’t biased towards either low-wage or high-wage workers. Under the measure, a business saves 6.2% on both a $40,000 worker and a $90,000 worker.
• The payroll tax holiday doesn’t apply with respect to wages paid during the first calendar quarter of 2010, but the amount by which the Social Security payroll tax would have been reduced under the payroll tax holiday provision during the fist calendar quarter is applied against the tax imposed on the employer for the second calendar quarter of 2010.
• The Act creates a similar new set of rules allowing a payroll tax holiday for railroad retirement tax purposes.
• The credit for retaining qualifying new hires is the lesser of $1,000 or 6.2% of the wages paid by the taxpayer to the retained worker during the 52-consecutive-week period. Thus, the credit for a retained worker will be $1,000 if, disregarding rounding, the retained worker’s wages during the 52-consecutive-week period exceed $16,129.03. However, the credit isn’t available for pay not treated as wages under the Code (e.g., remuneration paid to domestic workers).

Extension of enhanced small business expensing. The new law gives a one-year lease on life to enhanced expensing rules, which allow qualifying businesses the option to currently deduct the cost of business machinery and equipment, instead of recovering it via depreciation over a number of years. For tax years beginning in 2010, the maximum amount that a business may expense is $250,000, and the expensing election begins to phase out when a business buys more than $800,000 of expensing-eligible assets. These dollar limits are the same as those that were in effect for 2008 and 2009. Had the HIRE Recovery Act not been passed and signed into law, these dollar limits would have dropped this year to $134,000 and $530,000 respectively.

Submitted by Jim Ventriglia of James P. Ventriglia, CPA, Inc. or Cranston, RI.  James P Ventriglia, MST, CPA, is DDIFO’s CPA and has been servicing the accounting needs of  Dunkin’ Donuts franchisees for decades. For more information contact him at  jimv@jpvcpa.com or at 401-942-0008.

OPPOSE HEALTH CARE BILL AND RECONCILIATION PACKAGE!

There are only hours left and considering the recent developments explained below, it is imperative that you make your voice heard! Go to CFA VOTES! to oppose both the Senate-passed version of health care refom and the reconciliation bill, which was introduced yesterday.
 
Yesterday morning, the Congressional Budget Office released its score of the reconciliation bill (H.R. 4872, the Reconciliation Act of 2010). The cost is $940 billion over 10 years, more than both the House and Senate bills.  It reduces the deficit by $130 billion in the first 10 years and by $1.2 trillion in the second decade.
 
Later yesterday afternoon, Congress released the language of the reconciliation bill. As you may remember, this bill is intended to address the concerns of more liberal members of the House of Representatives who do not support the Senate-passed version of the bill. Procedurally, the House is planning on passing the Senate-passed version and Congress will then consider the reconciliation bill which requires only a simple majority to pass.
 
Regarding employer mandates, the reconciliation bill contains the following language and amendments to the Senate-passed version of health care reform:

• Increases penalty from $750 per full-time employee (FTE) to $2,000 per FTE for large employers (>50 employees) that do not offer coverage and have at least one FTE that receives a premium tax credit or cost-sharing subsidy

• Large employers that offer coverage and have at least one FTE that receives a premium tax credit will pay penalties of $3,000 per employee receiving a premium credit.

• New provision disregards the first 30 workers employed by the employer in calculating the amount of the penalty.

• Repeals assessments on employers who require employees to wait more than 30 days to enroll in the employer’s health insurance coverage.

• Allows employers to count part-time workers’ time as “full-time equivalents,” based upon a 30-hour work week per FTE, for the purpose of calculating the penalties.

The language of the bill is still being analyzed and interpreted, but the impact on businesses across the country will be devastating. If you haven’t yet done so, contact your Members of Congress and tell them to oppose health care reform – both the Senate-passed version and the recently publicized reconciliation bill. 

Tell your elected officials where you stand! Do it now!

Franchise Industry Says It’s Crunch Time for Health-Care Reform

Ken Walker the chairman of the International Franchise Association, and chairman and CEO of Driven Brands, at AllBusiness.com says “Start Over”. That’s the message that the International Franchise Association (IFA) and its grass-roots members are telling Congress as it considers comprehensive health-care reform. And we are not alone in this call.

A new Rasmussen Reports national telephone survey finds that while the president and his congressional allies search for a way to pass their proposed health-care plan, most voters remain opposed to it. Forty-two percent now favor the plan, while 53 percent are against it — findings that have remained relatively constant since just after Thanksgiving. The new figures include just 20 percent who strongly favor the plan and 41 percent who are strongly opposed.

The IFA continues to urge Congress to put aside the divisive debate over a comprehensive approach and focus instead on policies that make coverage more affordable and accessible to all Americans, particularly franchised small businesses.

Even in ideal economic times, imposing costly regulations and taxes on business is a bad idea. Congress should pursue ways to streamline and modernize health-insurance regulation rather than adding new costs to job creation and adding to the federal deficit.

The Rasmussen Reports survey finds that 57 percent of voters say the health-care reform plan now working its way through Congress will hurt the U.S. economy. Just 25 percent think the plan will help the economy. But only 7 percent say it will have no impact. (Twelve percent aren’t sure.)

Two out of three voters (66 percent) also believe the health-care plan proposed by President Obama and congressional Democrats is likely to increase the federal deficit — up six percentage points from late November. Ten percent say the plan is more likely to reduce the deficit, and 14 percent say it will have no impact on the deficit.

There are several provisions in the Senate bill that impact small businesses, including an increase in the Medicare payroll tax by $54 billion over 10 years. This increase will likely hit approximately one-third of small businesses across the country, which employ 30 million Americans. Since the provision is not indexed for inflation, the number of small businesses (filers) that will pay the tax will increase 53 percent over the first seven years it is in effect.

Payroll taxes are an especially burdensome tax because they tax the cost of labor. Regardless of whether a small business makes a profit or not, it is forced to pay this tax.

Congress should move forward with sensible policies that provide regulatory certainty to small-business owners to assure sustainable economic recovery and job creation.

Legislation currently being considered by the House of Representatives still contains an unacceptable mandate on employers to provide health insurance. Instead of mandates, IFA is urging Congress to work on legislation that will adopt the following consensus reforms:

•Tax credits for small businesses and the self-employed to help them afford the full cost of health-insurance plans;

•National or regional exchanges where small businesses can pool together to purchase insurance plans and achieve the benefits of choice and competition;

•Consumer-driven options such as health savings accounts and flexible spending accounts; and

•Real medical liability reform to end the out-of-control costs associated with unnecessary defensive medicine.

Read more at: AllBusiness.com

Action Alert: Please contact your Members of Congress and urge them to OPPOSE the current health care reform proposals. Specifically, tell your representatives to maintain the part-time worker exemption currently in the Senate-passed bill.

Additionally, if you live in or operate your businesses in the following member’s districts, please emphasize the impact of employer-mandated health care on your business and employees and urge them to continue to vote against the current health care proposals:

• Bobby Bright (AL-02)
• Christopher Murphy (CT-05)
• Suzanne Kosmos (FL-24)
• Allen Boyd (FL-02)
• Frank Kratovil (MD-01)
• Bart Stupak (MI-01)
• John Adler (NJ-03)
• Mike McMahon (NY-13)
• John Boccieri (OH-16)
• Bart Gordon (TN-06)
• John Tanner (TN-08)
• Rick Boucher (VA-09)
• Glenn Nye (VA-02)
• Brian Baird (WA-03)

TALKING POINTS: Visit CFA Votes! to send a customizable letter to your elected officials. If you choose to contact your members via telephone, below are talking points for your reference.

OPPOSE HEALTH CARE BILL AND INCLUSION OF PART-TIME WORKERS!

As you may have heard, President Obama has been pushing Congress to pass health care reform in the next several weeks. While the President’s proposal is similar to that passed by the Senate in December, he will seek to appease liberal members of the House of Representatives by passing a separate, more progressive bill shortly after the initial health care bill is passed. In fact, as recently as today, the administration has promised to take up the public option in the near future to appease progressives. This second “reconciliation bill” will only need a simple majority in the Senate in order to pass.

Obama is also meeting with more moderate House Democrats, who voted against the House version of the bill last year, in order to secure their votes this time around. These House moderates are considered prime targets for switching their votes now that the more moderate Senate bill will most likely be the bill that passes the House.

The Coalition of Franchisee Associations (CFA) for which DDIFO is a founding member has asked us to support their grass roots effort to oppose the current health care reform.

ISSUE: The final health care package will be assembled within the next few days. Therefore, it is essential that CFA members contact their lawmakers to oppose health care reform.

Specifically, the CFA has learned that Rep. George Miller (CA-07), a member of the Progressive Caucus and Chairman of the House Education and Labor Committee, is urging the White House and Congressional leadership to include part-time workers and narrow the small business exemption in the final health care reform package. The changes that Mr. Miller and his progressive caucus are proposing would increase the scope of businesses that would have to provide minimum coverage, as well as the portion of total fees imposed on employers.

Concurrently, in an effort to secure the votes needed to pass the Senate’s version of health care in the House of Representatives, the White House has targeted certain Representatives, urging them to switch their vote to “yes” in order to secure the bill’s passage.

ACTION: Please contact your Members of Congress and urge them to OPPOSE the current health care reform proposals. Specifically, tell your representatives to maintain the part-time worker exemption currently in the Senate-passed bill.

Additionally, if you live in or operate your businesses in the following member’s districts, please emphasize the impact of employer-mandated health care on your business and employees and urge them to continue to vote against the current health care proposals:

• Bobby Bright (AL-02)
• Christopher Murphy (CT-05)
• Suzanne Kosmos (FL-24)
• Allen Boyd (FL-02)
• Frank Kratovil (MD-01)
• Bart Stupak (MI-01)
• John Adler (NJ-03)
• Mike McMahon (NY-13)
• John Boccieri (OH-16)
• Bart Gordon (TN-06)
• John Tanner (TN-08)
• Rick Boucher (VA-09)
• Glenn Nye (VA-02)
• Brian Baird (WA-03)

TALKING POINTS: Visit CFA Votes! to send a customizable letter to your elected officials. If you choose to contact your members via telephone, below are talking points for your reference.
• As a small business owner, I provide jobs to those in the community. Employer mandates may well put my stores out of business and my employees out of work.

• Franchisees operate on thin profit margins. Including part-time workers in the employer requirements will overburden me by adding large new costs and administrative obligations in already difficult times. This will hinder my ability to maintain and create the jobs our economy needs to recover.
• Part-time employees are a large and essential component of my workforce. Many of my employees work for multiple employers to build a flexible work schedule or receive coverage under another health plan.

• An employer “pay or play” requirement does nothing to address the cost hurdles facing small employers like me. Instead of an employer requirement, Congress should enact reforms that address tort reform while expanding the number of affordable choices available to employers and their employees.
• The existing market needs more choices – not less. The potential inability of existing insurers to compete with a tax-payer funded government health plan threatens the stability of the private market.

Obama: Small Business Key for Recovery

President Obama puts economy, small businesses, and job creation at the center of his State of the Union address.

Kent Bernhard, Jr writes at Portfolio.com that faced with a national 10 percent unemployment rate and a corresponding erosion in his popularity, President Obama delivered his first State of the Union address tonight and offered up a laundry list of proposals aimed directly at the small businesses who do 60 percent of the hiring in America.

The president proposed eliminating all capital-gains taxes on small-business investment, creating tax incentives for small businesses to hire new workers and raise the wages of those they already employ, and steering $30 billion in money from the Wall Street bailout to community banks to lend to small businesses. In all, two thirds of the speech was devoted to the economy.

“Now, the true engine of job creation in this country will always be America’s businesses. But government can create the conditions necessary for businesses to expand and hire more workers,” Obama said. “We should start where most new jobs do—in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss.”

Just over a year into his presidency and less than a week before submitting his fiscal 2011 budget proposal, Obama proposed creating a task force of advisers to look for ways to reduce the nearly $1.4 trillion budget deficit. He also promised to freeze some discretionary spending for the next three years—a nod to those who have become more concerned in recent months about increased federal deficit spending. And he called on Congress to be more transparent about the money members add to the budget for pet projects—called earmarks.

“Rather than fight the same tired battles that have dominated Washington for decades, it’s time for something new. Let’s try common sense. Let’s invest in our people without leaving them a mountain of debt. Let’s meet our responsibility to the people who sent us here,” he said. “I’m also calling on Congress to continue down the path of earmark reform. You have trimmed some of this spending and embraced some meaningful change. But restoring the public trust demands more. For example, some members of Congress post some earmark requests online. Tonight, I’m calling on Congress to publish all earmark requests on a single website before there’s a vote so that the American people can see how their money is being spent.”

That pledge, however, isn’t stopping Obama from saying he hopes to invest in clean energy, an effort the White House says will create not only new small businesses and more jobs but also a bigger wave of innovation. Among his promises: renewed support for efforts to place a cap on carbon emissions and creation of a program to offer homeowners incentives to retrofit their homes to be more energy efficient.

“We should put more Americans to work building clean-energy facilities and give rebates to Americans who make their homes more energy efficient, which supports clean-energy jobs. And to encourage these and other businesses to stay within our borders, it’s time to finally slash the tax breaks for companies that ship our jobs overseas and give those tax breaks to companies that create jobs in the United States of America,” he said.

He added that incentives also have to be part of that picture, and hard choices, like one that would put a cost on greenhouse-gas emissions caused by burning coal, oil, and natural gas. Such a bill has passed the house but is stalled in the Senate.

“To create more of these clean-energy jobs, we need more production, more efficiency, more incentives,” he said. “That means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean-coal technologies. And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.”

For the long term, he also reiterated his call for financial reform, aimed at lessening risk and giving consumers more information.

“The House has already passed financial reform with many of these changes. And the lobbyists are already trying to kill it. Well, we cannot let them win this fight,” he said.

As with any State of the Union—the near-annual speech a sitting president gives to a joint session of Congress—Obama’s address served as a blueprint for where he wants to take his presidency for the coming year. And like with the speeches of his predecessors, Obama doesn’t skimp when it comes to making promises and proposals:
•He focused on making export deals, another area in which he hopes he can juice small-business hiring.
•He said he plans to steer more money to small banks to lend to small businesses. Plus, he reiterated his call for greater regulation of the entire financial system and for curbs on allowing banks to grow too big to fail.
•He called on Congress to pass a law reversing the recent Supreme Court ruling that “reversed a century of law to open the floodgates for special interests—including foreign companies—to spend without limit in our elections. Well, I don’t think American elections should be bankrolled by America’s most powerful interests, and worse, by foreign entities.”
•He’s proposing the hiring tax credit for more than 1 million small businesses.
•He’s aiming to double U.S. exports by pursuing a round of trade negotiations and strengthening ties with partners like South Korea, Colombia, and Panama.
•And finally, the president renewed his call for comprehensive health care reform, his signature issue. But he wants to reframe the issue, making the case that without such reform, the cost of health care drags down businesses’ ability to expand or create new jobs.

Obama made his case while his fellow Democrats still hold a majority in both houses of Congress, but he did so in a significantly changed political landscape ever since Massachusetts voters elected Republican Scott Brown to take the traditionally Democratic Senate seat that belonged to Ted Kennedy before his death.

That election deprived Obama of a 60-vote, filibuster-proof majority in the Senate, and that means the president will have to find a way to work with Republicans, not just on health care but on the other proposals he makes tonight.

 Read more at: Portfolio.com

Congress Boosts SBA Loans

Portfolio.com reports that after weeks of talk about the credit crunch facing small businesses, Washington finally is doing something about it.

The $636 billion defense bill passed by the Senate Saturday includes $125 million for the Small Business Administration. The SBA will use the funds to increase the government guarantee on its flagship 7(a) loans to 90 percent and reduce fees on its 7(a) and 504 loans. This will return the guarantee and fees to where they were before November 23, when the SBA ran out of the economic-stimulus funds that enabled the agency to make its loans more attractive.

The SBA’s normal guarantee on 7(a) loans ranges from 75 percent to 85 percent, depending on the size of the loan. The higher guarantee made SBA loans even less risky for lenders than they already were, and the fee reductions made the loans more affordable for small businesses. As a result, SBA lending increased dramatically as a result of the stimulus bill, after cratering last fall and winter along with other sources of credit.

A healthy SBA loan market is important for small businesses, especially those seeking long-term credit—loans that banks often don’t like to make without a government guarantee. SBA lenders and small-business groups had pleaded with Congress in November to find money to keep the higher guarantee and reduced fees in place, but Congress failed to act at that point.

As a result, SBA lending dropped when the stimulus enhancements expired.

This month, the Obama administration began pushing Congress to extend these SBA loan enhancements through September 30, 2010, the end of the current fiscal year. On Wednesday, the House tacked on $125 million to the defense bill, which will fund the higher guarantee and fee cuts through February 28. That’s the bill the Senate will vote on Saturday, before returning to health care reform.

The House appropriated another $354 million for the SBA as part of a $154 billion jobs bill—or “son of stimulus” in the words of Republican opponents—that passed Wednesday. This money would keep the higher guarantee and lower fees in place through the end of the fiscal year.

Democrat Nydia Velazquez, from New York, said the two bills “will provide vital funding for SBA to continue offering affordable small-business credit. Since their enactment earlier this year, these reduced-cost loans have put nearly $14 billion of capital into the small-business economy.”

“While this is an important step, much more will need to be done in the coming months if small businesses are going to realize their full potential as the catalysts of job creation,” said Velazquez, who chairs the House Small Business Committee.

The Senate has no plans to vote on the House’s jobs bill before it goes home for the holidays. It instead plans to craft its own legislation to boost jobs when it returns in January. So the fate of the SBA loan enhancements is uncertain after February 28.

Read more at: Portfolio.com

Immigration Reform Bill Introduced

Paul   Frumkin of Nation’s Restaurant News reports that the battle over immigration reform got off to an earlier start than anticipated when a group of lawmakers introduced a comprehensive bill into the U.S. House of Representatives this week.

With an estimated 1.4 million immigrants working in foodservice operations around the country, many in the restaurant industry had voiced support for comprehensive immigration reform when it was introduced and then later defeated in Congress during the Bush administration. There are an estimated 12 million illegal immigrants in this country.

The latest version, called the Comprehensive Immigration Reform for America’s Security and Prosperity Act of 2009, or HR 4321, is sponsored by Rep. Luis V. Gutierrez, D-Ill., and has 91 cosponsors in the House so far.

The bill would provide a path to citizenship, enable illegal immigrants to pay a $500 fine, learn English and pass a criminal-background check. It also would provide 100,000 extra visas for immigrants from countries with high rates of illegal immigration and would facilitate legal immigration for close relatives of U.S. citizens and legal residents.

It would also beef up border security and require employers to check a federal database to verify the immigration status of job applicants.

David French, vice president of government relations for the International Franchise Association, said the association was disappointed on the bill’s structure.

“We have hopes for a strong, bipartisan, comprehensive bill,” he said. “This one has several problems. For one thing, it doesn’t have a [temporary worker program] for immigrant workers.”

President Obama has vowed to address the immigration reform issue in 2010, and Sen. Charles Schumer, D-N.Y., currently is working on a separate bill that is expected to be introduced in the Senate next month.

 Read more:  Nation’s Restaurant News

Other Related reading: Los Angeles Times

Next Page »