The Small Business Jobs Act could be a game-changer for struggling small firms, a lending executive said recently.
George Harrop is the managing director of small-business lending at CapitalSource, a retail bank and commercial lender. He suggests that the act – which was signed into law on Monday – can help provide financing to small businesses that were too big to qualify for Small Business Administration-backed loans.
"SBA 7(a) loans are permanently increased from $2 million to $5 million, and SBA 504 loans can now go up to a total loan amount of $12 million," Harrop says.
Also significant for young entrepreneurs is that the bill sets up a $30 billion lending fund; the fund will provide federal money to community banks to stimulate small-business lending. An additional $1.5 billion will be provided to state small-business agencies in support of their loan programs.
And entrepreneurs can now deduct the cost of their health insurance from their self-employment tax – the 15.3 percent levy that the self-employed must pay for Medicare and Social Security.
In many ways, the jobs act will make life easier for those starting their own businesses.