As Small Biz Bill Stalls, Owners Wait

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Jay Colucci was told by a local community bank that he could get a loan for his trade show and convention planning business EventSphere …. only once a bill intended to increase small business lending passed into law.

“We’ve been watching this bill make its way through Congress,” Colucci told MainStreet. “Until it passes, we’re in limbo.”

Colucci, and countless other owners looking to expand or start a small business, will have to wait longer for their financial aid as the $30 billion bill, first proposed by the Obama administration, stalled in the Senate this week.  While Republicans and Democrats appear to now agree over the nuts and bolts of the bill, they have been unable to reconcile which amendments should be added to it.

Sixty votes were needed to end the filibuster and send the bill to a final vote. However, Democrats fell two votes short as all 41 Republicans voted together to continue debate on the bill.

As we previously reported, the bill would create a $30 billion government fund to help community banks increase lending to small businesses, combining it with about $12 billion in tax breaks aimed at small businesses The $30 billion fund was formerly part of a larger $134 billion grab bag bill, called the  American Jobs and Closing Tax Loopholes Act, which didn’t pass the Senate due to its large price tag. Congress did, however, ultimately pass smaller pieces of this legislation, extending higher Medicare payments to physicians first, a homebuyer tax credit second and unemployment benefits to the long-term jobless most recently.

This small business bill would effectively extend government programs, such as the American Recovery and Reinvestment Act, (otherwise known as the stimulus, which backed bank loans with federal funds) that expired early this year.

While the proposed lending fund would be available only to banks with less than $10 billion in assets, Republicans initially opposed its inclusion, likening it to the earlier, unpopular bailouts of large financial institutions. Many small business owners agree with the comparison, but the parallels are, in fact, what angers them.

“It really bothers me that our leaders in the Senate can bail out major corporations, auto manufacturers and big corporate banks, but they can't help support the small businesses,” Joshua Vandgrift, director of Owensboro Consulting & Business Services, told MainStreet.

Scott Gingold, a small business consultant, agreed. “Since the President, Congressmen and Senators readily admit small businesses create nearly all new jobs in America, why didn't GM, Chrysler and Ford have to go through the same process to obtain credit as small businesses do?"

Back in 2008, the government awarded  $15 billion emergency loans to automakers General Motors and Chrysler, in an effort to keep them from going under.

Republicans ultimately consented to the fund earlier this week, but wished to include amendments that, among other things, would add measures to increase border security, impose a government spending cap and lower the estate tax. They were also looking to repeal a new tax reporting requirement for businesses that was passed with the massive health care overhaul.

Senate Minority Leader Mitch McConnell (R-Ky.) said he believed Democrats were intentionally blocking these amendments. Democrats felt that Republicans kept lengthening their list of demands.

"What we are simply trying to do is pass a bipartisan bill that will help small business owners create jobs," Senate Majority Leader Harry Reid (D-Nev.) said. "We went to great lengths to address what Republicans claimed were their concerns."

"It takes a lot of effort to make a partisan issue out of a bill that should have broad bipartisan support," McConnell countered. "But our friends on the other side have managed to pull it off. They've outdone themselves."

President Obama tried to rally support for the bill, saying that it was proposed not only to boost these businesses but to help create more jobs for Americans. According to the Small Business Association, small businesses have generated 64% of net new jobs over the past 15 years and employ just over half of all private sector employees.

Colucci, the small business owner with whom we spoke, said he intends to use his loan to hire more staff so his company can attend more trade shows.

“It’s a little frustrating,” he said. “We’ll have to wait longer [to hire].”

Just how long remains to be seen. A test vote has been scheduled for Monday, but without Republican support, it is not likely to pass. The Senate then has one more week to reconcile the bill, which has already passed the House, before they go on summer vacation.  

Can’t wait on the Senate? Check out MainStreet’s article on how to increase your chance of getting a small business bank loan.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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