Senate OKs $30 bil to aid small businesses

WASHINGTON - The Senate passed long-delayed legislation Thursday designed to open up credit to small businesses and award them with other incentives to expand and hire new workers.

Democrats won a 61-38 vote to pass the legislation, joined by two Republicans. The measure would establish a $30 billion government fund to help open up lending for credit-starved small businesses, cut their taxes and boost Small Business Administration loan programs.

The tally gives President Barack Obama and his besieged Democratic allies in Congress a much-sought - but relatively modest - political victory with less than seven weeks to go before Election Day.

Obama said Thursday that the bill will help millions of small-business owners across the country grow and hire. "These tax breaks and loans are going to help create jobs in the short term," he said.

The fund would be available to community banks to encourage lending to small businesses. Supporters say banks should be able to use the fund to leverage up to $300 billion in loans.

The loan fund is opposed, however, by most Republicans, who liken it to the 2008 bailout of the financial system. They warn it would encourage banks to make loans to borrowers who aren't good credit risks.

Democrats say the measure is needed to help small businesses cope with a credit crunch that worsened dramatically after the financial crisis two years ago.

This legislation also would aid lending by lowering Small Business Administration loan-program fees and raising loan guarantee and lending limits.

The measure had been delayed for months and was successfully filibustered by Republicans in July. But on Tuesday, Democrats cracked the filibuster with the help of two Republicans, Sens. George Voinovich of Ohio and George LeMieux of Florida.

After Senate passage, the bill returns the measure to the House, where Speaker Nancy Pelosi said the chamber next week will send it to the White House for Obama's signature.

Democrats had hoped to pass the bill in July but couldn't win any GOP converts. They fell just short of defeating a filibuster.

The small-business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Long-term investors in some small businesses would be exempt from paying capital gains taxes.

But in the near term, the bulk of the tax cuts actually would go to big companies to allow them to more quickly recover the costs of capital improvements.

Before passing the measure, Democrats rejected a GOP bid to permanently extend the research and development tax credit.

The tally gives President Barack Obama and his besieged Democratic allies in Congress a much-sought - but relatively modest - political victory with less than seven weeks to go before Election Day.

Obama said Thursday that the bill will help millions of small-business owners across the country grow and hire. "These tax breaks and loans are going to help create jobs in the short term," he said.

The fund would be available to community banks to encourage lending to small businesses. Supporters say banks should be able to use the fund to leverage up to $300 billion in loans.

The loan fund is opposed, however, by most Republicans, who liken it to the 2008 bailout of the financial system. They warn it would encourage banks to make loans to borrowers who aren't good credit risks.

Democrats say the measure is needed to help small businesses cope with a credit crunch that worsened dramatically after the financial crisis two years ago.

This legislation also would aid lending by lowering Small Business Administration loan-program fees and raising loan guarantee and lending limits.

The measure had been delayed for months and was successfully filibustered by Republicans in July. But on Tuesday, Democrats cracked the filibuster with the help of two Republicans, Sens. George Voinovich of Ohio and George LeMieux of Florida.

After Senate passage, the bill returns the measure to the House, where Speaker Nancy Pelosi said the chamber next week will send it to the White House for Obama's signature.

by Andrew Taylor Associated Press Sept. 17, 2010 12:00 AM




Senate OKs $30 bil to aid small businesses