Executive+Summary+of+Small+Business+Jobs+Act+of+2010 by xiuliliaofz

VIEWS: 5 PAGES: 3

									 EXECUTIVE SUMMARY OF SMALL BUSINESS JOBS ACT OF 2010:
                      H.R. 5297

    I.      SMALL BUSINESS ADMINISTRATION (“SBA”)LENDING
            a. Loan Limits increased. SBA 7(a) loan limits are increased from $2 million to $5 million,
               SBA 504 loan limits are increased from $1.5 million to $5.5 million and SBA 7(a) Express
               Loans are increased from $300,000 to $1 million with micro loans from $35,000 to
               $50,000.
            b. SBA Guarantee. SBA guarantee levels for SBA 7(a) loan are increased from 75 percent
               to 90 percent.
            c. Fees. Borrower fees on SBA 7(a) and SBA 504 loans are waived through 2010.



    II.     TAX PROVISIONS
            a. Section 179 expensing. Allowable Section 179 expensing is increased from $250,000 to
               $500,000 for 2010 and 2011. Phase-out thresholds are increased from $800,000 to $2
               million.
            b. Bonus depreciation. 50% bonus depreciation is extended through 2010.
            c. Small business capital gain exclusion. The capital gain exclusion is increased from 50
               percent to 100 percent for stock issued by qualifying small businesses (issuer must be a
               C corporation whose assets do not exceed $50 million), acquired between September
               27, 2010 and December 31, 2010.
            d. Business credit carryback. The carryback period for general business credits is
               extended from 1 year to 5 years for small business with assets less than $50 million in
               gross receipts.
            e. Start-up deduction. The deduction for start-up expenses is increased from $5,000 to
               $10,000 and the phase-out threshold is increased from $50,000 to $60,000.
            f. Health insurance costs. Self-employed business owners will be allowed to deduct the
               cost of family health insurance.
            g. Cell phone deduction. Cell phones are no longer considered “listed property,” subject
               to 50+percent business use to be deductible.



    III.    STATE SMALL BUSINESS CREDIT
            a. $1.5 billion in grants will be made available to states to support small business lending
               programs.


Small Business Jobs Act Executive Summary                                                    Page 1 of 3
    IV.     SMALL BUSINESS LENDING FUND
            a. Overview
                      i. The Secretary of the Treasury is granted administrative authority over a $30
                         billion capital program to foster small business lending, referred to as the Small
                         Business Lending Fund.
                     ii. Participants in this lending fund will not be subject to TARP-like restrictions on
                         compensation, dividends or the like.
                    iii. Capital may be returned under the program without penalty if there is a law
                         that materially and adversely impacts a participating institution.
                    iv. House and Senate sponsored went on record to support Tier-1 capital treatment
                         of funds obtained under the program.
            b. Eligibility
                      i. The Small Business Lending Fund will be made available to eligible insured
                         depository institutions, bank holding companies, savings and loan holding
                         companies and Community Development Financial Institutions with up to $10
                         billion in assets.
                     ii. The Fund will be used to purchase preferred shares or comparable instruments
                         in eligible institutions.
                    iii. Institutions with less than $1 billion in assets at December 31, 2009 will be
                         eligible for investments of up to 5 percent of risk-weighted assets.
                    iv. Institutions with between $1 billion and $10 billion in assets at December 31,
                         2009 will be eligible for investments of up to 3 percent of risk-weighted assets.
                     v. A small business lending plan must be submitted to the applying bank’s primary
                         regulator with the Fund application. This plan will be considered confidential
                         supervisory information.
                    vi. Special consideration will be given to minority-owned institutions and those
                         serving minority and low to moderate income communities, in addition to those
                         serving gulf coast states affected by the Deepwater Horizon oil spill.
                   vii. Existing CPP participants that are current on dividend payments are eligible to
                         refinance CPP capital into this program.
                  viii. Banks defined as problem banks, having a current composite CAMELS ratings of
                         4 or 5 are not eligible to participate. Also banks that have been removed from
                         the problem bank list within the past 90 days are not eligible to participate.
                         Special consideration may be given to banks that are able to raise matching
                         private capital.
                    ix. The Treasury department is responsible for program application approval in
                         consultation with the applying banks primary regulator.




Small Business Jobs Act Executive Summary                                                      Page 2 of 3
            c. Lending Incentives
                    i. The baseline of the recipient bank’s lending is set as the average of the small
                       business lending reported in the call reports for the four quarters prior to
                       establishment of the Act.
                   ii. The base dividend rate is 5% per annum. During the first two years after
                       receipt, the dividend rate will vary based on the lending activity in the prior
                       quarter as compared to the baseline.
                  iii. Each increase in small business lending of 2.5 percent over the baseline will
                       reduce the dividend rate by 1 percent. By way of example:

                         Increase in small business lending                   Dividend Rate

                         0%-2.4%                                                    5%

                         2.5%-4.9%                                                  4%

                         5.0%-7.4%                                                  3%

                         7.5%-9.9%                                                  2%

                         10.0%+                                                     1%

                    iv. After the initial 2 years, the dividend rate is fixed according to the lending
                         activity in the eighth quarter relative to the baseline.
                     v. If in the eighth quarter, the bank’s lending activity has remained the same or
                         decreased from the baseline, the rate will be set at 7% until the expiration of
                         the 4 ½ year period beginning on the date of the initial investment.
                    vi. After 4 ½ years, the dividend rate increases to 9 percent regardless of lending
                         activity.
                   vii. All funds must be repaid in full after 10 years.
            d. Eligible Lending
                      i. Small business lending is defined by an eligible institution’s quarterly call report,
                         including:
                             1. Commercial and industrial loans;
                             2. Owner-occupied nonfarm, nonresidential real estate loans;
                             3. Loans to finance agricultural production and other loans to farmers;
                             4. Loans secured by farmland; and
                             5. Certain veteran-owned business loans.
                     ii. Loans above $10 million or loans to businesses having over $50 million in annual
                         revenues are excluded.

For more information on the Small Business Jobs Act and how Carillon Capital or Blue Bridge Financial can assist
your bank, contact Mark DeBacker at mdebacker@bluebridgefinancial.com or directly at 716.204.8471.


Small Business Jobs Act Executive Summary                                                         Page 3 of 3

								
To top