Supporting Small Businesses
President Obama believes we have to do more than just recover from this economic crisis. We have to create true middle class security by out-innovating, out-educating and out-building the world. We need an economy built to last – that creates jobs of the future and makes things the rest of the world buys. And we need to strengthen small businesses, which are the backbone of our economy and critical to job creation and sustained economic growth. That’s why, from day one, the President has focused on efforts that can help small businesses grow and expand – putting more Americans back to work. The Obama administration has taken steps to make credit more available to small businesses looking to grow and expand, cutting taxes, incentivizing investment and hiring and reducing barriers to growth.
President Obama is committed to creating an environment where America’s small businesses - our engines of job creation - can grow and prosper by supporting small business with new tax relief, favorable treatment of investments, and rewards for hiring. In his 2012 State of the Union address, the President proposed extending the payroll tax cut to firms by cutting in half their payroll tax on the first $5 million in payroll, completely refund payroll taxes paid on added workers or wage increases for current workers above the level of last year’s payroll and extending the 100 percent expensing provision that the President signed into law in December 2010 through 2012.
Since taking office, President Obama has shown his unprecedented commitment to small businesses across America:
Enacted 18 Tax Cuts: To date, the Obama Administration has passed 18 tax cuts for small businesses, including the elimination of taxes on capital gains on key investments in small businesses and 100 percent depreciation to support new investments in equipment – both of which the President has proposed to extend.
Addressed Access to Capital: Since the beginning of 2009, through the Recovery Act and the Small Business Jobs Act, the Small Business Administration (SBA) has supported over $93 billion in lending to more than 166,000 small businesses nationwide. The SBA more than doubled the maximum loan size for its largest programs, permanently raising the maximum 7(a) and 504 loans from $2 million to $5 million, and the maximum 504 manufacturing loan to $5.5 million. In addition, as part of Startup America, SBA has created a $1 billion Impact Investment Initiative to support private-sector investments in startup and high-growth firms in underserved communities and emerging sectors.The first investment fund was rolled out in Michigan, and will focus on building upon the state’s strong tradition of engineering and manufacturing. The passage of the Small Business Jobs Act in September 2010 created the Small Business Lending Fund and the Small Business Credit Initiative to help small businesses.
Tackled Health Care: Thanks to the Affordable Care Act, businesses that have fewer than 25 employees and provide health insurance can qualify for a small business tax credit of up to 35 percent to offset the cost of insurance. President Obama’s Fiscal Year 2013 budget proposes expanding this tax credit and increasing the maximum size of eligible companies from 25 employees to 50, offers more generous phase-out provisions and simplifies the credit, making it easier to claim. It is estimated that expanding this tax credit would benefit about half a million employers who provide healthcare to 4 million workers in 2012 alone.
Expanded and Accelerated Payment on Government Contracts: The Federal Government is the world's largest purchaser of goods and services, with purchases totaling over $500 billion per year, more than $400 billion of which is considered “small business eligible.” Many businesses, large and small, view the Federal Government as an important customer. The first two years of the Obama Administration saw the largest two-year increase in the percentage of federal contracting dollars going to small businesses in a decade. Expanding contracting opportunities with the Federal Government is one of the most powerful small business tools: each percentage increase in procurements made to small businesses means about $4 billion in business for these firms. The White House and SBA continue to work with agencies to meet their goals.
In addition, the Administration has established an inter-agency effort to enhance small business contracting transparency and cut down on contract processing and payment times for small business contractors. SBA created a small business dashboard so government officials and the public can check where each agency stands on a daily basis in meeting their small business contracting goals. Additionally, as part of the President’s plan to create jobs, the Administration launched QuickPay, an initiative to accelerate payments to small contractors by cutting the time they are paid by the federal government in half.
Finally, the Administration repealed the Bush Administration-era rule requiring that the IRS withhold 3 percent of contractors’ income.
Making Government Programs and Resources Accessible: The President directed his CIO and CTO to launch BusinessUSA, a one-stop shop to make it easier for businesses to access the services and information they need to help them grow, hire, export and compete globally. BusinessUSA was launched as part of the Administration’s ongoing effort to support and strengthen American businesses.
Supporting America’s Entrepreneurs
Today’s entrepreneurs are tomorrow’s Fortune 500 companies and exemplify America’s competitive edge in ingenuity and innovation. In January 2011, the Obama Administration launched the Startup America initiative, harnessing public and private resources to accelerate the success of America’s high-growth entrepreneurs. Startup America is working in the following ways:
Unlocking Access to Capital: America’s most innovative companies need equity capital to grow and hire faster. The Obama Administration is committing $2 billion as a match for private investment in high-growth companies over the next five years. The first of these private Impact Investment Funds will provide up to $130 million in capital to job-creating businesses throughout Michigan, and new Early Stage Innovation Funds are also opening for business. President Obama is also using the tax code to create incentives for more private investment in the early-stage companies that need it most. The Administration has proposed new rules to simplify tax credits for investment in revitalizing low-income communities, and the President’s budget includes a permanent, 100 percent exemption from capital gains taxes for investors in small businesses. And as part of the American Jobs Act, the President is committed to unlocking even more private capital through smart regulatory changes that are consistent with investor protection, including expanding “crowd funding” opportunities and making public offerings easier.
Connecting Mentors: Experienced mentors can dramatically improve the success rate of first-time entrepreneurs. The Obama Administration has launched cost-effective new mentorship and training opportunities for thousands of entrepreneurs starting new high-growth companies – including military veterans, undergraduate engineers, and clean energy entrepreneurs.
Reducing Barriers: Obama Administration leaders have traveled the country to get first-hand input from entrepreneurs about how to reduce barriers to success. In direct response, the Administration has taken action to dramatically streamline requirements facing entrepreneurs in clean energy and biotech, plus new efforts to attract and retain immigrant entrepreneurs who will create jobs here in the U.S.
Accelerating Innovation: America must speed up taxpayer-funded research breakthroughs from the lab to the marketplace. The National Science Foundation has launched the new Innovation Corps to do just that, while over 20 other federal agencies have cooperated to fund regional entrepreneurial ecosystems that fuel high-tech job creation. The President also directed all federal research agencies to accelerate innovation by speeding up grants to startups and improving partnerships with industry.
Engaging the Private Sector: This is not a job for government alone. In response to the President’s call to action to accelerate America’s entrepreneurs, the Startup America Partnership, a nonprofit alliance of entrepreneurs, major corporations, and service providers, has mobilized well over $1 billion in private-sector commitments -- from free software to free consulting and legal services -- to grow 100,000 U.S. startups over the next three years. These resources are available to U.S. entrepreneurs right now.
And to learn how government can unleash new market opportunities, top Administration leaders continue to hit the road to engage with young entrepreneurs, urban entrepreneurs, rural entrepreneurs and high-tech entrepreneurs in healthcare, clean energy, and learning technology– including a “policy challenge” to get the best ideas from entrepreneurs on the front lines of innovation.