WASHINGTON – United States Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, held a hearing this morning entitled “Creating Jobs and Growing the Economy: Legislative Proposals to Strengthen the Entrepreneurial Ecosystem.” The hearing examined the Success Ultimately Comes from Capital, Contracting, Education, Strategic Partnerships and Smart Regulation (SUCCESS) Act of 2012 (S.3442) and other legislative proposals to strengthen America’s small business community.
Testifying before the Committee were: Small Business Administration (SBA) Associate Administrator for Entrepreneurial Development, Michael Chodos; SBA Associate Administrator for Investment & Senior Advisor for Innovation Policy, Sean Greene; State Director for the Maine Chapter of the National Federation of Independent Business, David Clough; Sales Manager for Construction Bonds, Inc., Joshua A. Etemadi; Senior Fellow for the Manhattan Institute for Policy Research, Diana Furchtgott-Roth; Executive Vice President of the Granite State Economic Development Corporation, Scott Gardiner; Chief Executive Officer of QRI, Inc., Fonda Lindfors New; as well as President and Chief Executive Officer of Womenable, Julie Weeks.
“When I took over as Chair of this Committee in January 2009, our country was facing the worst economic recession since the Great Depression,” said Senator Landrieu. “The U.S. economy lost 818,000 jobs that month alone. From September 2008 through the end of 2009, the Great Recession wiped out seven million American jobs. We responded with one of the most substantial pieces of small business legislation in the Committee's history, the Small Business Jobs Act. That bill is a prime example of the role the Committee played, and continues to play, in ensuring the future economic success of America's small businesses.”
Sen. Landrieu continued, “The SUCCESS Act provides another opportunity for this Committee to think big in our efforts to help small businesses get the assistance they need to grow our economy. The fact that this legislation has already received 57 bipartisan votes before the United States Senate is a monumental feat in today’s political climate, and my hope is we can get this passed before Congress adjourns for the year.”
Throughout the year, the Committee held three roundtables to examine the ecosystem for entrepreneurship. During these roundtables, the Committee heard from 41 experts who made more than 60 recommendations on how we could help small businesses, entrepreneurs, and start-up companies. These recommendations helped shape the SUCCESS Act.
The SUCCESS Act received 57 votes on July 12th as part of Senate Amendment 2521 to S. 2237, the Small Business Jobs and Tax Relief Act of 2012. Five Republicans, including Ranking Member Olympia Snowe (R-Maine) and Senator David Vitter (R-La.), supported the SUCCESS Act on the Floor.
Included in the SUCCESS Act are a number of extensions of expiring or expired tax cuts for small businesses that Senator Landrieu and Ranking Member Snowe originally introduced. According to a report from the Congressional Joint Committee on Taxation, the SUCCESS Act’s tax relief provisions would deliver $12 billion of tax relief for small businesses in 2013 and another $5 billion in 2014.
Specifically, the SUCCESS Act’s tax relief for small businesses would:
- Extend 100 percent capital gains tax relief on qualifying investments in small business stock purchased through Dec. 31, 2013, and held for five years.
- Double the existing deduction for start-up costs for entrepreneurs starting new small businesses.
- Temporarily reduce the period an S-Corporation is required to hold onto its assets after converting from a C-corporation, which effectively frees up capital for these businesses.
- Allow small businesses to carry back general business credits from 2012 and 2013 to offset five years of taxes to increase cash-flow for businesses that are currently not realizing profits.
- Extend the availability of enhanced Section 179 expensing to give businesses the option of writing off the cost of qualifying capital expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. This provision would also allow small businesses to write-off up to $250,000 of improvements to restaurant and retail property.
The SUCCESS Act also includes some key provisions to increase access to capital for small businesses.
One provision is the Expanding Access to Capital for Entrepreneurial Leaders (EXCEL) Act that was introduced earlier this year by Senators Landrieu and Snowe. The Excel Act would modify the Small Business Investment Company (SBIC) program to raise the amount of SBIC debt the SBA can guarantee from $3 billion to $4 billion. It would also increase from $225 million to $350 million the amount of SBA guaranteed debt a team of SBIC fund managers who operate several funds can borrow.
Another key part of the SUCCESS Act would extend for one year a provision allowing small business owners to use Small Business Administration 504 loans to refinance existing commercial mortgages. The measure, originally enacted as part of the Small Business Jobs Act of 2010, did not become operational until February 2012, significantly shortening the period of time that business could use 504 loans to refinance qualifying existing debt. It expired on Sept. 27, 2012, and helped lead to the highest 504 lending year ever, at no additional cost to the taxpayer. The 504 loan program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate loans to help them acquire major fixed assets for expansion or modernization.
Another piece of legislation Senator Landrieu discussed today aims to nurture Americans’ innate entrepreneurial skills from the elementary school classroom through post-graduate business school and onward. The Today’s Entrepreneurs are Advancing Mentors (TEAM) Act formally authorizes the SBA Office of Entrepreneurial Support (OES), which President Bush created administratively in 2008.
The primary purpose of the TEAM Act will be to give out competitive grants to nonprofits and private sector partners to leverage effective outside entrepreneurship training and development programs. The SBA would be directed to work with effective and reputable groups, such as Junior Achievement, Boy Scouts, Girl Scouts of America, SBA resource partners, local chambers of commerce, cities and counties, and private sector partners, to bolster existing entrepreneurial training and development programs.
The second part of the bill would formally authorize and continue the Emerging Leaders Initiative, an in-house SBA entrepreneur training model. This program has created 908 jobs in just four years, and the majority of its graduates report an average revenue increase of $1.8 million within a year of graduation. Fonda Lindfors New of Louisiana testified that after completing and implementing the e200 program's financial planning curriculum, she hired 12 new jobs (with the potential to hire five more soon) within a year and increased her company’s revenues by 52 percent. This is a key example of why Senator Landrieu is seeking to expand this inexpensive, effective program.
After three years, the Government Accountability Office will evaluate the success of these two entrepreneurship training approaches.