Senate Passes Small Business Bill

WASHINGTON—After an impasse of more than a month, the Senate on Thursday approved a small-business bill that includes measures aimed at boosting access to capital and tax credits to provide temporary financial relief.

Democrats hope the legislation will help show voters they are in control of managing the economic recovery, even though the current employment picture looks grim.

Both parties agree that renewed hiring by small businesses is crucial to any turnaround in the job market. Lawmakers say most job growth comes from small businesses.

The national jobless rate of 9.6% has remained stubbornly high despite repeated attempts by the Obama administration and Congress to foster job creation. This legislation is almost certain to be the last attempt by Democrats to prime the economic pump before the November midterm elections, even though many of the provisions included in the bill are unlikely to be enacted before the Nov. 2 vote.

President Barack Obama urged lawmakers to pass the legislation.

Senators voted 61-38 Thursday, with two Republicans—Sens. George LeMieux (R., Fla.) and George Voinovich (R., Ohio)—joining every Democrat in voting in favor of the bill.

The House must still vote to approve the bill before it is sent to Mr. Obama for his signature. House speaker Nancy Pelosi (D., Calif.) said Thursday the House would likely act on the measure next week.

The centerpiece of the bill is the creation of a $30 billion lending facility that would direct taxpayer money to regional banks on the condition they lend it to small businesses. Unlike the emergency rescue package implemented at the height of the crisis in 2008, banks would have to volunteer to participate in this program.

The rate of interest they are charged on the public funds would depend on how much they increased their small business lending.

The bill also includes about $12 billion in tax breaks, including an immediate write-off of 50% of new equipment purchases in 2010 for small and large businesses. It would double, to $500,000, the amount of new investment that small businesses are allowed to expense in 2010 and 2011.

The legislation would allow self-employed people to deduct health-insurance costs for themselves and their families. It also removes employer-provided cellphones from a list of items that can be taxed as fringe benefits.

Although efforts to provide assistance to the small-business sector are generally passed with ease by lawmakers, this legislation has been stuck on the Senate floor for more than a month because of partisan rancor.

Initially, Republicans opposed the creation of the lending facility, drawing comparisons to the Troubled Asset Relief Program. A lengthy disagreement over what other measures Republicans would be allowed to hold votes on further delayed consideration of the bill.

Ultimately, the Democrats allowed the minority party just two votes: one on extending a biofuels tax credit by a year and another seeking to make permanent a research-and-development tax credit. Both were defeated Thursday morning.

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