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Slightly more than thirty days have passed since the Small Business Jobs Act of 2010 (H.R. 5297) (the Act) went into effect. The White House heralded the Act as a benefit to small businesses “on day one,” and the U.S. Small Business Administration called it “the most significant piece of small business legislation in over a decade.”

A month later, and with the November elections to take place in a matter of days, the obvious question is whether or not any small businesses have realized the incentives and other intended benefits of the Act? Perhaps it is too soon to tell but some suggest that the Act may have missed its mark. The incentives and other programs of the Act include the creation of the Small Business Lending Fund Program. The Act also includes modifications to and extensions of certain SBA loan programs to establish higher loan limits and provides temporary enhancements to assist small business with working capital and commercial real estate financing. 

The Act also establishes eight immediate small business tax cuts. There is some question as to whether the title of the Act is somewhat of a misnomer, since many small businesses may not be able to fully benefit. While one of the goals of the Act is to make more capital available to small business through various SBA loan programs, SBA lending standards and procedures will undoubtedly remain a challenge to navigate. Individual lender underwriting standards, which in most cases have been tightened during the economic downturn, also continue to be difficult to meet, thus making credit still very difficult to come by for new borrowers.  Many of the tax credits and related incentives, while immediate, are not permanent.  Further, the Act’s expanded exclusion of gain on the sale of qualified small business stock pursuant to Section 1202 of the Internal Revenue Code of 1986, as amended, the underlying exclusion applies only to C corporations.

However, many start-up companies are S corporations or limited liability companies. In addition, some of the changes brought about due to the Act create or expand certain reporting obligations to the IRS inevitably increasing compliance and reporting costs. With the November 2010 mid-term elections drawing near, perhaps there is no more important topic on the minds of voters than job creation. The most readily apparent sector to target for new jobs is small business.  Small businesses have been hit particularly hard by the recent economic downturn.  President Obama recently remarked that since the Act’s inception “more than 3,600 small business owners have already received more than $1.4 billion worth of new loans.”  While it may be too soon to determine whether or not the Act truly achieves its objectives, it certainly seems to be a step in the right direction toward helping small businesses continue to weather the economic storm.

As is evident with the sweeping tide of displeasure toward government reforms in general, it still may be “too little, too late” for many of our officials who are facing re-election.

To learn more about David A. Adams and his practice, please visit his profile.