The 2009 tax breaks President Barack Obama signed into law should have bolstered many small businesses. Instead two years later, there is still confusion, and according to many, underutilized opportunities. Most small businesses agree that the Recovery Act’s impact is difficult to quantify.
While a number of companies credit their survival during the turbulence of the past two years to the Recovery and Reinvestment Act, many are skeptical. They contend that the law – over a thousand pages — is onerous and limited in many areas where they were hoping to see more.
Most small businesses believe that large, public companies benefitted the most from the stimulus package. 70% believe that the package made little difference for their business according to a survey conducted last year by Discover Financial Services.
“For many small business owners, this stimulus package, which cracked the lid on credit access, plus new tax breaks and contracting opportunities, is just too unmanageable.” said Achim Neumann, President of A. Neumann Associates. “Without the right resources, it’s tough to research and understand all the available options.”
According to the Recovery Accountability and Transparency Board, approximately 92% of the funds are available for use. Obama administrators say there has been a positive effect, and the SBA contends that tens of thousands of small companies benefit from loans, federal contracts and from tax breaks.
Many small business tax provisions have under the new laws, been extended and some revived multiple times. And, many new government contracts were issued through the end of September.
Between February 2009 and August 2010, the SBA approved $22 billion in small business stimulus loans. As part of the package, fees were eliminated on SBA loans, and the guarantee level rose from 75% to 90%.
According to Neumann, “SBA-backed loans afford many benefits for business owners, not the least of which includes hiring workers and financing capital improvements in order to expand.”
The stimulus has created a few tax breaks for business owners, such as a carry back provision that allows them to apply losses to taxes paid on profits up to five years ago, presenting a refund opportunity.
The law also increased a deduction for equipment expensing and extended a tax credit for hiring veterans and high school dropouts. However, a common small business complaint is that the tax breaks didn’t offer immediate relief. Many had to wait until they filed their returns in order to get many of the benefits.