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Recovery Act UpdatesQuick Links
March 16, 2009 - The President commits to helping small businesses through the economic recovery, Wharton SBDC client Marco Lentini testifies.
The American Recovery and Reinvestment Act (ARRA) of 2009 is a $787 billion combination of tax cuts, incentives and government spending designed to kick-start the U.S. economy in the short term and drive long-term economic growth. Find out how you can take advantage of the stimulus package to help your small business. The HIRE ActUnder the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”). Learn more by visiting the Tax Center. Health Care ReformPresident Obama signed health reform legislation into law. Learn more about how health care reform may benefit your small business, employees and their families at SBA's website. Health insurance can be confusing, complicated and difficult to understand. Pennsylvania's Insurance Department is a great source to help you understand your insurance options. SBA Recovery LendingMay 26 –While funds for short-term extentions under ARRA have been exhausted, SBA communicated to lending partners that it has reactivated the Recovery Loan Queue. SBA Administrator Karen Mills stated that agency will urge Congress to coninue to support recovery loan prorgrams for small businesses. SBA’s 7(a) and 504 ARRA Transition Plan: SBA has transitioned 7(a) and 504 programs back to their pre-ARRA terms and communicating those plans with its lending partners. As part of this plan, SBA has reactivated its Recovery Loan Queue today. The queue will operate in the same manner as when originally implemented in November 2009. Sometimes previously approved loans are later cancelled or never disbursed for a variety of reasons, and the funds committed to those loans can be applied to applications in the queue. The queue takes this into account and beginning on the transition date will allow eligible small businesses, in consultation with their lenders, to choose to be placed in the queue for possible approval for an ARRA loan if funding once again becomes available. Small business owners and lenders will have transparent access to the queue via www.sba.gov/recoveryq and will be able to remove themselves from the queue at any time to be considered for a non-ARRA SBA loan with all applicable fees and, for 7(a) loans, standard guaranty levels. The authorization for the 90 percent guarantee on 7(a) loans ends on May 31, but the authorization for fee waivers is in place through September 2010. To learn more about SBA’s ARRA programs and other resources for small businesses, please visit www.sba.gov. April 16—Administrator Mills presses for longer-term extension for successful programs President Barack Obama signed legislation yesterday providing $80 million in additional funding to continue important enhancements in the U.S. Small Business Administration's two key small business loan programs. The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and small business fee relief. The SBA estimates the $80 million will support about $2.8 billion in small business lending under the 7(a) and 504 programs. "Small businesses across the country have been able to secure critical "We also know that small businesses could greatly benefit from the additional tools the President has proposed, including higher SBA loan limits and refinancing for commercial property mortgages, which could help thousands of small businesses avoid potential foreclosure. Small businesses need these improvements to ensure their access to the capital they need to drive economic growth and create jobs in communities all across the country." As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7 (a) and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February, 2010, and an additional $60 million was provided subsequently. SBA was authorized for an additional $40 million in late March. Under the new extension SBA may continue to reduce loan fees in its 7(a) and 504 programs and to provide higher guarantee levels on 7(a) loans through May 2010, or until the funds provided under the bill are exhausted. This extension has no effect on the continued availability of financing under
other SBA Recovery Act programs, including SBA's America's Recovery Capital
(ARC) loan program and the agency's Microloan program. Recovery Act funding
still remains available for both of those programs. Source: SBA SBA Recovery Lending Extended Through April 30March 29—President Barack Obama signed on Friday legislation extending through April the U.S. Small Business Administration’s ability to provide enhancements in its two largest small business loan programs. The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and fee relief. As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans. Under the new extension SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April, 30, 2010, or until the funds provided under the bill are exhausted. March 16—Congress has sent legislation to the President authorizing the extension of guarantee increases and fee reductions for the SBA's loan programs through December 31, 2010. The SBA estimates that the additional funding will support about $1.8 billion in lending by extending its ability to guarantee loans enhanced by Recovery Act provisions. These include higher guarantees on SBA 7(a) loans (90 percent compared with the normal 70 percent through March 28) and a waiver of 7(a) and 504 loan fees normally paid by borrowers. These provisions have already proved successful in stimulating small business lending as SBA Administrator, Karen Mills reports: "The increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs...As a result, average weekly loan approvals by SBA have climbed by 87 percent compared to the weekly average before passage of the Recovery Act." In other big news: Source: SBA SBA Recovery Lending Programs ExtendedMarch 4—President Barack Obama signed legislation Tuesday extending until March 28 the U.S. Small Business Administration’s ability to provide small business loans that are enhanced with special provisions of the American Recovery and Reinvestment Act (ARRA), including a higher guarantee of SBA- backed loans and a waiver of loan fees normally paid by borrowers. SBA estimates the additional funding will support about $1.8 billion in small business lending. Source: SBA SBA Re-Activating Recovery Loan QueueFeb 22—SBA announced it will re-activate the Recovery Loan Queue. SBA Administrator Karen Mills stated that the additional $125 million appropriation approved in December to extend SBA’s 7(a) loan guarantee to 90 percent and reduce or eliminate borrower fees on both the 7(a) and 504 loans will be used faster than expected. Loan volume has surged since earlier this week when an Information Notice was released to lenders. SBA’s ARRA ProgramsSBA received $730 million in ARRA to support economic recovery programs for small businesses. Included in the appropriation was $375 million to support raising the government guarantee to 90 percent on SBA’s 7(a) loans and reducing some lender and borrower fees on its 7(a) and 504 loans, the agency’s two largest lending programs. The funds for these popular provisions ran out in November 2009. SBA received an additional $125 million appropriation in December 2009 along with authority to continue both of the programs through February. SBA’s 7(a) and 504 ARRA Transition PlanSBA is in the process of finalizing the plan for transitioning its 7(a) and 504 programs back to their pre-ARRA terms and communicating those plans with its lending partners. This plan, when implemented, will include re-activating the Recovery Loan Queues no later than Monday, Feb. 22, 2010. The Queues will operate in the same manner as when originally implemented in November 2009. Sometimes previously approved loans are later cancelled or never disbursed for a variety of reasons. The Queues take this into account and beginning on the transition date will allow eligible small businesses, in consultation with their lenders, to choose to be placed in the queue for possible approval for an ARRA loan if funding becomes available. Small business owners and lenders will have transparent access to the queue via www.sba.gov/recoveryq and will be able to remove themselves from the queue at any time to be considered for a non-ARRA SBA loan with all applicable fees and, for 7(a) loans, standard guaranty levels. The authorization for the 90 percent guarantee on 7(a) loans ends Feb. 28, 2010, though funds may be exhausted sooner. Furthermore, applications in the Queues after Feb. 28, 2010 will only be eligible for decreased or eliminated borrower fees when funds become available. Source: SBA Expansion of Two Critical SBA Lending ProgramsFeb 5—President Obama proposed the expansion of two critical Small Business Administration (SBA) lending programs, aimed at allowing small businesses to refinance and increasing limits for working capital. These are both legislative proposals designed to help small businesses through what continues to be a difficult period in credit markets. Details of the President’s new small business initiatives
These proposals complement the President’s broader small business agenda.
The $30 Billion Small Business Loan ProposalFeb 2—President Barack Obama pitched his $30 billion loan program proposal to help small businesses grow their companies through increased hiring. Obama said he hopes to take money repaid by Wall Street banks as part of the $700 billion bank bailout known as TARP to create the Small Business Lending Fund, which would provide capitol to community banks to spur economic growth on Main Street. The new loan program could, by loosening credit, help to create thousands of jobs. To encourage hiring, the president supports a tax credit that will encourage companies to hire workers, to pay competitive wages, and to expand facilities such as manufacturing plants. The administration also supports cutting the capital gains tax on small business investment. Source: Inc. magazine Key Elements of the New Small Business Lending FundLimited to Community and Smaller Banks Which Devote a Higher Share of Lending to Small BusinessesThe Small Business Lending Fund would support lending among small- and medium-sized banks (with assets under $10 billion). These banks devote the highest percentage of their lending to small businesses in their communities, accounting for over 50 percent of all small business loans nationwide, even though they make up only about 20 percent of all bank assets. Program Would Be Separate and Distinct from TARP to Encourage ParticipationBy transferring, through legislation, $30 billion to a new program that would be distinct from TARP, the Administration’s proposal would encourage broader participation by banks, as they would not face TARP restrictions. A Core Function of New Fund Would Be Offering Capital With Incentives to Increase Small Business LendingThe Administration’s core proposal for the new lending fund is an initiative to invest in smaller banks capital under terms that provide strong incentives to increase lending. As participating banks increase lending to small firms compared to 2009 levels, the dividend paid to Treasury on that capital investment would be reduced. Administration Will Discuss with Congress Additional Ideas to Enhance Credit for Small Businesses Through the Small Business Lending FundWhile the Administration is presenting its plan to provide capital with an incentive structure to maximize small business lending, it looks forward to discussing with Congress other ways that – in addition to what is described above – the Small Business Lending Fund could be fully deployed.
New Small Business Loans and Grants for PhiladelphiaSmall businesses in Philadelphia will be able to compete for $27 million in loans and grants, available through stimulus-funded programs, Mayor Michael Nutter said Wednesday. Applications for funding are available on PIDC’s Web site and through the city’s Business Services Portal. Source: Philadelphia Business Journal President Says Jobs, Small Businesses Are PriortySmall businesses played a prominent role in President Barack Obama’s State of the Union speech January 27. Obama said jobs “must be our No. 1 focus in 2010,” citing small businesses as America's job creators: “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 it’s time to become her own boss,” the president said. To help small businesses grow, the president proposed:
The White House blog has a statement from Karen G. Mills, Small Business Association (SBA) Administrator, about the tax credit for hiring. Funding for SBA Recovery Lending Programs Extended
Funds for these programs were exhausted in November but restarted December 28. For non-ARRA 7(a) or 504 loans funded during the transition period, this extension does not provide a retroactive guarantee or waived fees. Loans that were funded under non-ARRA terms cannot be canceled and resubmitted to take advantage of the ARRA extension provisions. SBA anticipates the lending programs will support $4.5 billion in small business lending. Source: SBA via Business Wire New Green Energy Revolving Loan FundDec. 10—Governor Edward G. Rendell announced the commonwealth will use up to $12 million in American Recovery and Reinvestment Act funding to create a new revolving loan fund to support energy-saving projects and develop clean, renewable energy resources that put Pennsylvanians to work. The fund will finance energy efficiency upgrades that will save at least 25 percent of the total energy consumption of an entire building or facility, and develop and install onsite energy technology that generates electricity from renewable resources, and create and retain jobs. View guidelines or submit application - deadline Jan. 6, 2010 President Announces New Help for Main StreetDecember 8—The president pledged to extend loan aid and tax breaks to small businesses and to create a new tax credit for hiring new workers in a speech at the Brookings Institution. He also suggested the Treasury will use some of the TARP money originally intended to bail out banks to aid small businesses. Aside from the new hires tax credit, a lot of the small business aid extends existing tax and lending relief into next year:
More details are available on whitehouse.gov. Obama’s speech is the latest recognition that a Main Street recovery must parallel Wall Street’s rally to ease unemployment. Source: BusinessWeek Loans for Rural BusinessesPennsylvania has $98 Million in Business & Industry funding through ARRA. USDA is now accepting applications for commercial loans for rural businesses of all sizes. Deadline is September 15, 2010.
October Progress Report
Local Weatherization Program ContactsYou may have heard about federal stimulus funds that are coming to Pennsylvania for residential weatherization projects. These funds will be passed along from the state, via the Weatherization Assistance Program, to local organizations that will use the funds to provide weatherization services to current participants in the Low Income Home Energy Assistance Program (LIHEAP). Each local agency will determine how to provide the weatherization upgrade services. Contractors should contact these agencies directly to inquire about opportunities to bid on these projects. In addition, contractors participating in this program must be certified to participate.
Microloan Program to ExpandThe U.S. Small Business Administration is expanding its Microloan program and increasing access to capital for small businesses. The program is shifting to funding provided under the Recovery Act for $20 million in loans and $20 million in technical assistance. Microlenders use the SBA funding to provide loans of up to $35,000 to entrepreneurs, which can be used for working capital and acquisition of materials, supplies, furniture, fixtures and equipment. The average loan size is about $13,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level. Microloan Intermediaries in Pennsylvania
View full list or check out Pennsylvania's Business Financing Programs for other options. "Green" ProvisionsWe're getting a lot of questions about how businesses can benefit from "green" provisions in the American Recovery and Reinvestment Act of 2009 (ARRA). Our Environmental Management Assistance Program team has identified a number of energy tax incentives for small and large businesses: Modified Accelerated Cost-Recovery System (MACRS)This accelerated depreciation schedule covers a variety of renewable energy technologies that have five year MACRS schedules (solar PV and solar thermal, fuel cells and micro turbines, geothermal electric, direct use geothermal and geothermal heat pumps, small wind, and combined heat and power), and some biomass properties that have seven year MACRS schedules. For details on MACRS review the Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. Bonus DepreciationThe federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% bonus depreciation provision for eligible renewable-energy systems acquired and placed in service in 2008. This provision was extended (retroactively to the entire 2009 tax year) under the same terms by The American Recovery and Reinvestment Act of 2009 enacted in February 2009. To qualify for bonus depreciation, a project must satisfy these criteria:
If the property meets these requirements, the owner is entitled to deduct 50% of the adjusted cost basis in the first year (2008 or 2009) and the remaining 50% along the ordinary depreciation schedule. Refer to the IRS guidance document for bonus depreciation for details. Energy Efficient Commercial Building Tax DeductionOwners of new and existing buildings can receive $0.30 - %1.80 per square foot for energy efficiency upgrades to the Lights, HVAC system, building envelop, and the hot water system. http://www.efficientbuildings.org/ http://www.energytaxincentives.org/uploaded_files/irs_notice2008-40.pdf Corporate Energy Investment Tax Credit (ITC)The corporate energy investment tax credit has been extended until 2016 for solar, fuel cells, and small wind: 30%, geothermal, micro turbines, and combined heat and power: 10%. Maximum incentive amounts apply depending on the technology. Small wind and solar projects are not subject to an incentive cap. Companies eligible for this tax credit may elect to take a grant from the U.S. Treasury Department equal to the tax credit instead. The Treasury Department is not yet accepting applications for the grant funds but they just published the long awaited guidelines.
Renewable Energy Production Tax Credit (PTC)Commercial and Industrial entities can receive a tax credit for the production of renewable electricity. The size of the credit depends on the technology: 2.1 cents per kWh for wind, geothermal, closed-loop biomass, 1.0 cents per kWh for other eligible technologies. The tax credit applies for the first 10 years of operation. Temporary Increase in Credit for Alternative Fuel Vehicle Refueling PropertyQualified property placed in service in 2009 and 2010 is now eligible for a 50 percent credit, and the per-business location limit increases to $50,000. Property relating to hydrogen remains at the 30 percent rate, but the per-business location limit rises to $200,000. Plug-in Electric Drive Vehicle CreditThe new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. Plug-In Electric Vehicle CreditThe new law also creates a special tax credit for two types of plug-in vehicles: certain low-speed electric vehicles and two- or three-wheeled vehicles. ARC LoansOn June 15, SBA made the America's Recovery Capital (ARC) loan program official, which allows deferred-payment loans of up to $35,000 to "established, viable, for-profit small businesses." Many banks are only offering these loans to existing customers. SBA lists the banks who have made ARC loans in Pennsylvania to date on its website.
Any of the 18 SBDCs in the state can provide more detailed assistance in pursuing this new financing option. If you would like to speak directly to a customer service representative about the ARC Loan Program, please call the toll-free number (866-947-8081) Monday through Friday 8AM - 9PM or contact your local SBA office:
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