Written by Dave Lavinsky
On Monday, President Obama signed the Small Business Jobs Bill. The bill provides $42 billion in loan incentives and tax cuts for entrepreneurs and small businesses.
Specifically, the Bill does a few important things:
1. The Bill increases the government guarantee on the SBA’s 7(a) loans to 90% through December 31.
Some explanation for some of you who are new to raising funding:
The SBA is the United States Small Business Administration. The SBA doesn’t lend money to entrepreneurs. Rather, local banks give out the loans, but the SBA guarantees a certain percentage of the loan amounts (so if the entrepreneur defaults on the loan, the SBA pays the bank 80% to 85% of the loan amount). With the new program, the guarantee is being raised to 90% which makes lending less risky to the banks.
The SBA’s 7(a) Loan Program is its primary program “to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through normal lending channels.”
2. The Bill includes a new $30 billion lending fund that community banks can use to make loans to entrepreneurs and small businesses.
3. The Bill includes $12 billion in tax breaks for small businesses.
Overall, this is great news to entrepreneurs and small businesses who gain 1) more access to funding, 2) better funding terms, and 3) tax breaks.
This is also positive news for the US economy, as entrepreneurs and small business owners have historically created the majority of jobs and job growth in our country.
(Note: Want to tap into this new funding from the Small Business Jobs Bill? Growthink’s Step by Step Guide to Raising Capital From Banks and SBA Lenders will teach you how to quickly and easily get the right SBA and/or bank loan to fund your business.)