Time & Attendance
By David Ferris
Jan. 25, 2012
The Small Business Jobs Act of 2010 contains several provisions that can spur growth for a range of small businesses, from one-man shops to companies worth millions. Here is a guide to the most useful parts of the bill.
Higher Limits for 504 loans: These ceiling for these loans, intended for capital-intensive expansion projects, rose permanently from $2 million to $5 million, and for manufacturers to $5.5 million. The loan is for up to 50 percent of a project’s cost, with the loan made by the private sector but guaranteed by the Small Business Administration. At least 10 percent of the project cost must be provided by the business owner. Another provision of the law allows companies to use a 504 loan to refinance mortgage debt through the end of 2012.
Higher Limits for 7(a) Loans: Like its cousin the 504, the 7(a) loan limit grew permanently from $2 million to $5 million. But the intended recipients are highly specific types of small businesses. They include exporters, rural businesses and those run by veterans. Also, dealers of cars, boats and other vehicles can take advantage of 7(a) until the end of 2013.
Higher Limits for SBA Microloans: The microloan, a smaller and more flexible type of loan, saw its top end rise from $35,000 to $50,000. It may be used for working capital or purchase of inventory, furniture, machinery or equipment. These loans are repaid in a maximum of six years.
Alternate Size Standard: The SBA has long defined “small business” differently depending on what sector of the economy it is in. It still has industry-specific criteria for small businesses, but now has adopted an alternate—and uniform—size standard. Under the new standard, a company qualifies as a small business if it has a tangible net worth up to $15 million and an average net income up to $5 million in the last two years.
David Ferris is a freelance writer based in the Washington, D.C., area. To comment, email firstname.lastname@example.org.
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