Small Business Jobs Act of 2010

An important piece of legislation affecting small businesses was signed into law on September 27, 2010. The Small Business Jobs Act contains a variety of provisions designed to help small businesses to invest, expand, and add jobs.

This article provides a summary of the highlights of this new law:

1. 50% bonus depreciation extension – This allows businesses to receive a tax reduction by accelerating the depreciation rate on capital expenditures. The Tax Relief Act of 2010 raises this to 100% for productive capital investments made in 2011.

2. Higher deduction for start-up expenses – To encourage entrepreneurs to start new businesses, the deduction has been temporarily increased from $5,000 to $10,000. It is tied to a phase-out limit of $60,000 in total expenses.

3. Capital write-off increased – Through the end of 2011, the maximum write-off is $500,000. The total amount of investment at which the write-off phases out is $2 million.

4. Elimination of capital gains taxes on some investments – For key investments made in 2010, capital gains tax is zero if the investment is held for at least five years.

5. Five-year carry-back of general business credits – Qualified small businesses can carry back credits to offset five years of taxes and offset the alternative minimum tax (AMT).

6. New health insurance deduction for self-employed – For the 2010 tax year, a deduction for health insurance costs is available when calculating self-employment taxes.

7. Limit on tax reporting errors for small businesses – The law changes the penalty for certain tax errors to a percentage of the benefit realized from the transaction. This helps small businesses because the penalty was previously based on a fixed dollar amount, which resulted in a disproportionate penalty when compared to large businesses.

8. Easier cell phone deductions – Documentation required for the employer-provided cell phone tax deduction has been reduced and simplified.

9. Enhanced SBA loans – Provides more than $12 billion in lending support, with extension of the 90% loan guarantee and reduced fees.

10. Higher loan limits – Increases loan limits across the board in the top loan programs. For small businesses, it permanently increases micro-loan limits from $35,000 to $50,000. It also increases the SBA Express loan limit from $350,000 to $1 million through September 27, 2011.

11. Commercial real estate refinancing – Beginning this spring and continuing through September 2012, some small businesses will be able to refinance owner-occupied mortgages into the 504 loan program.

12. $30 billion small business lending fund – As an incentive to extend more loans, smaller community banks will receive low-cost capital in exchange for exceeding their 2009 lending level.

13. State small business credit initiative – Up to $1.5 billion will be available for state-sponsored small business lending programs.

14. Alternate size standards – Expands eligibility of small businesses for SBA loans by increasing the alternate size standard to businesses with less than $5 million in net income and $15 million in net worth.

15. Intermediary lending program – In mid-2011, a pilot loan program will provide up to $20 million per year to leverage nonprofits and other organizations that help small businesses. Loans of up to $200,000 will be available for the next three years.

16. Export assistance – Expands loan assistance, raises loan limits, and provides $90 million in competitive grants over three years to help small businesses increase exports.

17. Dealer Floor Plan (DFP) – Three-year pilot program to increase financing opportunities for small businesses that sell items that are titled such as boats, cars, and recreational vehicles.

18. Competitiveness Demonstration program eliminated – Expands opportunities for small contractors in 11 industries such as landscaping, construction, and pest control.

19. Less bundling of contracts – Government contracting officers have the authority to reserve orders for small businesses where there will be multiple contract awards.

20. Prime contractors more accountable – Primes must justify when plans aren’t met and when subcontractors aren’t paid as scheduled. This is designed to hold primes accountable for their bids that promise work for small businesses and then don’t follow through on award.

21. Equal treatment – Assures parity among competitors across all federal programs for set-aside contracts targeted for small businesses.

22. Counseling and training – Small Business Development Centers nationwide will receive up to $50 million in grants to facilitate counseling and training programs.

The law provides needed help to small businesses that are the engine of future economic growth. Take advantage of the tax cuts, lending support, and other opportunities if you believe your business will benefit. More detailed information and assistance is available directly from the Small Business Administration (

Michael Sanibel is a freelance writer specializing in business, marketing, personal finance, law, science, aviation, sports, entertainment, travel, and political analysis. He graduated from the United States Air Force Academy and is also licensed to practice law in California and New Hampshire. Michael wrote this feature article exclusively for Debbie (, an organization dedicated to helping small businesses succeed.