New Tax Credit Proposed for Small Businesses
Many small business owners seek funding through a small business loan so they may build their company and hire employees. Now, small business owners who hired workers or gave a raise to their team last year may benefit from a new tax break, if recent budget proposals from the Obama administration are passed. The president recently proposed to offer tax relief to small businesses as part of his $3.8 trillion budget plan, according to the Associated Press.
The tax credit would be available to businesses that paid less than $20 million in wages last year, and participants would get a one-time 10 percent credit on the sum the owner paid to new employees or gave in raises to current workers. An organization that grew its payroll by $2 million, for instance, would see a $200,000 income tax credit. The tax credit would have a limit of $5 million.
The goal of this incentive is to encourage hiring and improve staff members’ pay to boost the economy. Government officials also expect the proposal to streamline the application process for Small Business Administration (SBA) loans as well as strive to bolster the number of lenders that work with the SBA. The president’s budget would allocate $810 million in funds to the SBA, a 12 percent decline from the $109 million of last year’s budget, according to ABC News.
The budget plan also underscored several other components that would affect small businesses. For example, SBA 7(a) loan fees will be waived for loans under $150,000, and small business owners will once again be allowed to refinance 504 loans – financing typically used to acquire or expand property.
Analysts are uncertain whether this proposal will be able to win over Republicans in Congress, the New York Times reported.
Spokesman for the National Federation of Independent Business, Kevan Chapman, said in an e-mail that the tax credit may not be “a big help to small businesses that are struggling or treading water.”
Small business owners who need a small business loan or merchant cash advance to help with hiring employees or raising current workers’ pay should contact National Funding, a leader in the industry, about securing the appropriate financing.