Unlocking Credit for Small Businesses - Page 4 of 5

Unlocking Credit for Small Businesses

Requirements on Bank Lending to Small Businesses and Greater Efforts to Extend Small Business Loans

Require the 21 Largest Banks Receiving Financial Stability Plan Assistance to Report Their Small Business Lending Every Month: As part of the President’s commitment to increasing transparency and accountability, Treasury will — for the first time — require the 21 largest banks receiving capital from the government to report how much small business lending they do every month.

Call for Quarterly Reports of Small Business Lending By All Banks: Today, Secretary Geithner called for every bank nationwide to report their total lending to small businesses in their regular quarterly reports, rather than just once a year. Secretary Geithner will ask bank regulators to take steps to amend the quarterly Report of Condition to achieve this important objective. This will offer more current information about trends in small business lending, while at the same time providing important information about how well government programs are working to stimulate these loans.

Issue Call for All Banks to Make Efforts to Increase Small Business Lending: Today, Secretary Geithner called on all banks — whether or not they receive FSP assistance — to make an extra effort to extend small business loans to creditworthy borrowers. In light of the extraordinary assistance provided to the banking system, Secretary Geithner emphasized that lenders should take a special responsibility for providing the credit that small businesses need to operate, expand and add jobs.

5. Issue Guidance for An Expanded Carryback Provision as Part of the Recovery Act’s Comprehensive Tax Cut Package for Small Businesses

Establish Five-Year Carryback Provision to Increase Tax Refunds for Small Businesses: Today, the IRS will issue guidance for a provision in the Recovery Act that allows businesses with gross receipts of up to $15 million to “carry back” their losses for up to five years, effectively allowing them a rebate on taxes paid in previous years. The Joint Committee on Taxation estimates that this measure will increase liquidity for small businesses by $4.7 billion by September 30, 2009.

Continue Implementation of Recovery Act’s Comprehensive Tax Cut Package for Small Businesses: The carryback provision is only one of several measures in the Recovery Act that will improve liquidity for small businesses by lowering their taxes, including:

Incentives to Invest in Plant and Equipment by Allowing Small Businesses to Write Off Up to $250,000 of Investment: The Recovery Act allows small businesses to immediately write off up to $250,000 of qualified investment in 2009, providing an immediate tax incentive to invest and create jobs.

Additional Liquidity Support By Reducing Estimated Tax Payments:
Normally, small businesses have to pay 110 percent of their previous year’s taxes in estimated taxes. But with incomes down for many small businesses this requirement is too burdensome — and causing a cash crunch. The Recovery Act allows small businesses to reduce their estimated payments to 90 percent of the previous year’s taxes, helping to boost their liquidity and better align their estimated taxes with their