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Senate takes up bills to help small businesses get capital

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Senate takes up bills to help small businesses get capital - Phoenix Business Journal

http://www.bizjournals.com/phoenix/news/2012/03/02/senate-takes-up-bills-to-help-small.html...

From the Phoenix Business Journal: http://www.bizjournals.com/phoenix/news/2012/03/02/senate-takes-up-bills-to-help-small.html

Phoenix Business Journal by Kent Hoover, Washington Bureau Chief Date: Friday, March 2, 2012, 8:45am MST Related: Banking & Financial Services

Kent Hoover Washington Bureau Chief - Phoenix Business Journal WASHINGTON -- The U.S. Senate appears ready to follow the House’s lead and pass legislation that would make it easier for small companies to obtain capital from investors. Senate Majority Leader Harry Reid, D-Nev., announced Feb. 28 that the Senate would move forward on bills “to spur small-business growth” by streamlining rules on raising capital while still protecting investors. The House overwhelmingly passed legislation in November that would allow businesses to use “crowdfunding” -- soliciting small equity investments from large numbers of people via the Internet -- as long as the total raised is $2 million or less. The bill limits individual investments in crowdfunded securities to either $10,000 or 10 percent of the investor’s income. In addition, the House raised the threshold for stock offerings under the U.S. Securities and Exchange Commission’s Regulation A from $5 million to $50 million. This would allow more companies to raise capital without registering the stock with the SEC. The Senate Banking Committee has held two hearings on these proposals and will hold another hearing the week of March 5, Reid said.

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Senate takes up bills to help small businesses get capital - Phoenix Business Journal

http://www.bizjournals.com/phoenix/news/2012/03/02/senate-takes-up-bills-to-help-small.html...

“This is something we should agree on,” he said. “These companies need the ability to get cash to innovate, grow and build.” “Access to capital continues to be a major struggle for small businesses and entrepreneurs. It is a no-brainer for the Senate to move forward with this package of capital formation bills,” said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council. “Based on my positive interactions with Senate offices on both sides of the aisle, I believe we are on track for getting the package of capital formation bills through the chamber.” President Barack Obama has endorsed these bills. He also has proposed phasing in securities regulations for smaller companies in their first few years after going public. Banks make most money since 2006, increase lending to businesses Banks insured by the Federal Deposit Insurance Corp. made $119.5 billion last year, their greatest combined profit since 2006. For the fourth quarter, banks made $26.3 billion -- up $4.9 billion from the same period a year earlier. This marked the 10th consecutive quarter that bank profits showed a year-over-year increase. “Insured institutions of all sizes continued to make substantial progress in improving their profitability,” said acting FDIC Chairman Martin Gruenberg. The number of banks reporting net losses fell to 18.9 percent in the fourth quarter, compared with 27.1 percent a year earlier. Banks set aside $19.5 billion for losses, 40 percent less than a year earlier. The number of banks on the FDIC’s “problem list” fell to 813, the smallest number since the first quarter of 2010. Business loan volume grew by nearly $63 billion in the fourth quarter, marking the sixth consecutive quarter of growth. “Banks continue to aggressively seek out business borrowers as companies consider expansion in an improving economic environment,” said James Chessen, chief economist for the American Bankers Association. “The industry is now in a much better position to support the economy through expanded lending,” Gruenberg said. “However, levels of troubled assets and ‘problem’ banks are still high. And while the economy is showing signs of improvement, downside risks remain a concern.” Obama’s corporate tax reform plan doesn’t cut it for many businesses Business groups welcomed President Barack Obama’s framework for corporate tax reform, but many said his proposals fall short of what’s needed.

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Senate takes up bills to help small businesses get capital - Phoenix Business Journal

http://www.bizjournals.com/phoenix/news/2012/03/02/senate-takes-up-bills-to-help-small.html...

The plan calls for reducing the corporate tax rate from 35 percent to 28 percent, and reducing the effective tax rate for manufacturers to 25 percent. Dozens of tax breaks would be eliminated to make sure these rate reductions don’t add to federal deficits. To discourage U.S. businesses from shifting operations overseas, the plan calls for a minimum tax on foreign earnings. It also calls for simplifying taxes on small businesses. Small businesses would be allowed to expense up to $1 million of the cost of investments in new equipment, and those with up to $10 million in annual revenue could use the cash method of accounting, which is simpler than the accrual method. The current cash accounting threshold is $5 million. Republican presidential candidates would go further than Obama on corporate tax reform. Mitt Romney wants to cut the corporate tax rate to 25 percent; Rick Santorum wants to cut it to 17 percent and exempt manufacturers; Newt Gingrich wants to cut it to 12.5 percent; and Ron Paul wants to cut it to 15 percent. The president’s tax plan would reward some sectors, such as manufacturers and clean energy companies, which would continue to receive targeted tax breaks. But it would penalize other sectors, such as oil and gas companies, which would lose their tax breaks. Businesses with overseas operations not only would continue to be taxed when they bring these profits back to the U.S., but also would face a new minimum tax on their foreign earnings. Plus, most small businesses don’t pay corporate taxes; their profits flow through to their owners for tax purposes. “Reforming the corporate tax code does not help the majority of small businesses; in fact, it creates even more uncertainty by taking away the deductions that many small-business owners count on each year,” said Dan Danner, CEO of the National Federation of Independent Business. “The focus should be on individual rate reform, keeping the tax rates for small business low, and allowing small businesses to actually grow and create jobs, as opposed to being a piggy bank for the IRS,” he said.

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Summary The U.S. Senate appears ready to follow the House’s lead and pass legislation that would make it easier for small companies to obtain capital from investors.

Description The president’s tax plan would reward some sectors, such as manufacturers and clean energy companies, which would continue to receive targeted tax breaks. But it would penalize other sectors, such as oil and gas companies, which would lose their tax breaks. Businesses with overseas operations not only would continue to be taxed when they bring these profits back to the U.S., but also would face a new minimum tax on their foreign earnings.

Tags: barack obama, Crowdfunding, Crowdsourcing, Harry Reid, Mitt Romney, Newt Gingrich, The House, US Senate

Posted by Jayne Ann

Mar 03, 2012 01:43 pm GMT Viewed 1372 times

Author: Kent Hoover Source

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