News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman


For Immediate Release                                                       CONTACT:  Alex Haurek; Duncan Neasham
January 28, 2009                                                                                                         (202) 226-3636

Velázquez Hails Passage of Economic Recovery Package
Legislation to Spur $13 Billion in Lending, Investment for Entrepreneurs

WASHINGTON, D.C. — Economic recovery legislation passed by the U.S. House of Representatives would infuse the nation’s small businesses with $13 billion in new lending and investment and provide $30 billion in targeted tax relief that will help smaller firms, Rep. Nydia M. Velázquez (D-N.Y.), Chairwoman of the House Small Business Committee, said today.  In recent months, entrepreneurs have struggled with plunging consumer demand, while also finding that needed credit has been shut off in frozen financial markets, problems the measure would address through provisions crafted by the House Small Business Committee.

“Our prosperity begins with Main Street businesses in communities across the country,” said Rep. Velázquez.  “It is critical that entrepreneurs have the resources they need not only to survive this downturn, but to help create jobs and lead the nation toward recovery.”

With commercial loans grinding to a halt and the number of Small Business Administration (SBA) backed loans reaching record lows, restoring the flow of credit for daily operations is crucial for small businesses.  The recovery legislation, the “American Recovery and Reinvestment Act of 2009,” increases the guarantee on SBA loans for lenders, inducing commercial lenders to lend, while also providing capital for entrepreneurs through a new debt refinancing program within the agency.  The bill also contains provisions to unclog frozen secondary credit markets, which in recent months have stopped working, denying private lenders the liquidity they need to make additional loans.  Providing this fresh capital to entrepreneurs is expected to result in the creation or retention of 400,000 jobs, more than 15 percent of the jobs the economy shed last year. 

Earlier this month, the House Committee on Small Business held a forum on the small business economy in which entrepreneurs discussed the challenges facing them and recommended policies like these to promote economic recovery.

“Our Committee has heard from small businesses across a variety of sectors about their need to access credit for operational costs,” said Rep. Velázquez (D-N.Y.).  “This legislation will go a long way toward addressing their concerns and getting capital flowing again.”

Rep. Velázquez also highlighted $30 billion in targeted tax relief provisions in the bill, which will help small firms improve cash flow. By providing a 5-year carryback of net operating losses (NOLs), the bill would enable businesses to write off 90% of losses incurred in 2008 and 2009 against taxes assessed over the previous five years, thereby shoring up troubled balance sheets. The legislation would repeal the onerous 3% withholding tax on payments to government contractors.  The legislation also extends small business expensing, doubling the amount enterprises can immediately write off on their taxes for capital investments and for purchases of new equipment in 2009.

“By providing thirty billion dollars in targeted tax relief, this legislation will help cash-strapped businesses that will spend the money now and spur economic recovery in the short term,” Rep. Velázquez added. 

With the House passage of the American Recovery and Reinvestment Act, the Senate will need to take up its version of legislation.  A final package is expected to be sent to the President for his signature in February.

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