3 Goodies for Small Business in the Build Back Better Act
The $3.5 trillion Build Back Better Act has some tax increases for pass-through business entities, but there are some breaks in it as well for business. As proposed, the bill would inject $25 billion into small business-related programs. The Chair of the Senate’s Committee on Small Business & Entrepreneurship stated that the funding is “aimed at our most challenged small businesses to provide justice in America in entrepreneurship,”
There are no assurances that this act will pass both houses of Congress, but should it do so, there are three provisions that could end up signed into lawi.
- Direct lending for key SBA loan programs
The U.S. Small Business Administration will be allowed to make loans directly in their 7(a) and 504 programs instead of going through commercial banks as is the current law.
- $4.5 billion over 10 years for direct lending from the 7(a) program.
- $2.8 billion over 10 years for direct lending from the 504 program.
- 7(a) loans for up to $1 million for manufacturing companies.
- 7(a) loans for up to $150,000 for other small businesses.
Small business owners would be able to go straight to the SBA for loans. This is intended to help small businesses that were not able to take advantage of PPP funding due to not having existing commercial bank relationships.
- Boosts to the SBIC program
The SBIC, Small Business Investment company, is licensed as an investment fund by the SBA. It gives capital to small businesses. The SBIC borrows money from the SBA at favorable rates and brings its own money to combine to create the fund.
The new bill would break out some subprograms, VSBICs, Venture Small Business Investment Companies. These companies would invest:
- $9.5 billion in underserved markets and critical industries.
- $20 million for a mentorship program for less experienced fund managers. The overall goal is to ensure that managers are sourced from underserved areas, both geographically and otherwise.
The changes are intended to provide better access to affordable capital. This should provide more affordable capital for small business.
- Help with federal contracts
The U.S. Government is the largest single buyer of goods and services in the world. The intent of the bill is to get a larger cut of those expenditures for American small businesses. Though 2020 saw a record $145 billion in small business federal contracts, the number of contracts awarded decreased by 38% from 2020 through 2019. Provisions of the bill include:
- Increase from $10 million to $20 million the SBA’s guarantee for surety bonds given to business to help them win government contracts.
- $35 million for procurement training for veteran small business owners.
- $525 million for the “Pathway to Prime Grant Program.” It will help federal subcontractors to become prime contractors dealing directly with the government.
At the time of this writing, the bill is in flux. There can be changes and it may not end up enacted. If it is, see if some of these new programs can work for your business.
i 3 Ways You Could Benefit from Biden’s $25 Billion Small-Business Assistance Plan – Inc.com