Economic Stimulus for Small Business 2010

In the midst of the bank and automobile bailout of 2009, the federal government implemented  policies to help small businesses obtain credit and relief from the recession.  Primarily the government offered tax relief and easier access to Small Business Administration administered loans.   The goal of the programs was to reignite the United States growth engine.

The stagnant economy and continued job loss seems to suggest that the efforts in 2009 did not meet their objectives.  First, small businesses around the country continue to report difficulty in obtaining financing when they need it.  Banks claim there is less demand for loans now because consumer spending is down.  However, small businesses report being unable to qualify for loans at large banks.  Additionally, the tax relief, including a decreased capital gain tax for investments in small business, did not encourage venture capital or other private equity investments.

So, President Obama and his economic team have decided to try again.  During his State of the Union speech, President Obama announced two major initiatives to encourage economic growth for small businesses:

  1. elimination of the capital gains tax on investments in small businesses; and
  2. a $30 Billion fund to make loans available through small and community banks to small businesses.

Over the past two years, venture capital investments in technology and other research and development intensive businesses has been difficult to obtain.  Venture capital has sought safer investments where a return on investment is, perhaps, more likely.  Therefore, the elimination of the capital gains tax on investments in small businesses could encourage venture capitalists to invest.

Similarly, it is unclear how much more effective the $30 Billion set aside for small businesses at small and community banks will be than those funds made available through the Small Business Administration last year.   Some claim small business’ demand for loans is down because of the economy.  Others report that small businesses struggle to qualify for loans because of the economy.  Ideally, if Congress approves the funds, the money will be made available to small businesses in a manner that will allow those businesses that have survived this far into the recession to thrive as we recover.

For more information please contact me.

About Nancy Prager

Nancy Prager is an attorney based in Washington, D.C. She represents a wide range of clients on matters from intellectual property to estate planning. Before starting her own practice, she practiced with firms in Memphis and Atlanta, as well as providing business development services to technology companies. She launched her practice to offer strategic legal services to clients at an affordable rate. Additionally, Nancy is a sought after speaker and writer on issues related to the convergence of intellectual property, technology and media. Nancy was asked to write a series of commentaries for News.com on the emerging legal issues related to the transmission of content on the internet. She has spoken to organizations and conferences around the country on issues related to the convergence of technology, content and intellectual property, as well as strategic legal issues for companies, individuals and artists. Journalists often rely on Nancy as a resource for emerging legal issues. Nancy has a strong commitment to social justice. She has founded, or co-founded, a number of organizations and programs that provide tangible services to their constituencies. For example, while a student in law school she developed the Domestic Violence Advocacy Center that provides legal services to victims of domestic violence. Additionally, she has been involved with a number of organizations that provide services to children and their families, including serving on the boards of the Harwood Center and Porter Leath Children’s Services. She is a graduate of Wake Forest University School of Law and the University of Wisconsin, Madison. She is a member of the District of Columbia Bar, the State Bar of Georgia and the State Bar of Tennessee. She has been a member of a variety of legal organizations including the Copyright Society of the USA and the American Bar Association.
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