With the next presidential election coming up, as a small business owner you may be thinking about which candidate has your best interest in mind. The Small Business Jobs Act, which was passed last year, is the president’s greatest accomplishment in this area. This article examines how effective this legislation is in stimulating economic activity.

The Small Business Act is a piece of legislation that was passed September 27, 2010 and had the goal of providing increased resources for small business through 16 tax cuts, loan provisions, and other opportunities. One of the most notable parts of this was the $30 billion government fund established to encourage community banks to increase lending with the incentive of reduced interest rates (1-2%). In order to qualify, a business must have less than $15 million net worth and $5 million average income. President Obama supported the bill for almost a year until it passed, while the GOP filibustered in July 2010 to prevent its passage in the Senate. In a Washington Post-ABC News poll conducted from July 14-17, 2011 48% of Americans voted that the president has cared more for the small business community than the GOP, which received 39% of the votes.

The goal of the Small Business Act was to stimulate demand for loans and increase small business growth. This was to come from increasing small banks’ financing capability through the $30 billion Small Business Lending Fund and increased microloan limits—from $35,000 to $50,000—for small businesses in underserved communities. Nevertheless, the result has been somewhat disappointing for government supporters and small business owners alike. CNN Money reported on July 20th that only $11.8 billion of the $30 billion allotted for the Small Business Lending Fund will end up being used before the application deadline on September 27th of this year. It was also reported that only 13% of eligible banks submitted applications for the program.

The main issue seems to be the overall state of the economy, which makes businesses wary to accumulate more debt without knowing that they will make the profits enabling them to repay their loans. The National Federation of Independent Business said, “The Small Business Act falls short of addressing the most significant problems facing small business owners — lack of sales and uncertainty.” If the overall state of the economy doesn’t improve as a result of other efforts of the Obama administration such as the stimulus package, the administration will unlikely have its goals of business growth and job creation met.

One failing of the SBA is its limited time frame. Many of the tax breaks, which will only be in effect for 2010 and 2011, will expire before small businesses can fully take advantage of them. The government has also been slow in distributing the loans/money. It has taken the Treasury department about ten months to give the second wave of approvals, with others still in the process. Another complaint by SOCMA and others is that the act did not address the major problem of the high cost of federal regulations, which the SBA estimated to be $1.75 trillion in 2008. This number was 36% higher per employee for small businesses than large corporations.

The Small Business Jobs Act demonstrated Obama’s effort to provide aid to the small businesses during a dismal time for the U.S. economy. It has been successful in making more credit available to small business and providing tax breaks for a limited time period.

Nonetheless, because the administration lacked a successful economic growth strategy it was unable to achieve its goals as business owners were wary to take out loans. For banks and business that have decided to participate, however, it has promise in giving a jolt to stagnant growth and hiring.

For more information please visit the SBA website.



1) SBA: “Small Business Jobs Act of 2010”

2) Washington Post: “Obama tops GOP on helping middle class; also has edge on small business”

3) Market Watch: "Obama Economic Policies Defy Logic and Reason”

4) Powder Bulk Solids: “SOCMA Says Small Business Jobs Act Falls Short of Meaningful Assistance”

5) WGRZ: “Has the Obama Administration Helped of Hurt Small Businesses?”

6) CPA 2 Biz: “Much Ado About Nothing: Small Business Jobs Act of 2010”

7) CNN Money: “Small Business Program Misses the Mark”

8) AOL Small Business: “Why the Small Business Jobs Act is Good for You—and the Economy”

9) Daily Times: “Editorial: Bipartisan cooperation boosts small business”