Sandra Westlund-Deenihan, (left) president of Quality Float Works in Schaumburg, and Rep. Melissa Bean (D-8th), who spearheaded the legislation, both believe the recently passed Small Business Jobs Act will facilitate community bank lending, thus stimulating the economy.
Sandra Westlund-Deenihan, (left) president of Quality Float Works in Schaumburg, and Rep. Melissa Bean (D-8th), who spearheaded the legislation, both believe the recently passed Small Business Jobs Act will facilitate community bank lending, thus stimulating the economy.
In saner times, perhaps there would be greater fanfare for the Small Business Jobs Act.

Signed into law Monday, Sept. 27 by President Barack Obama, the legislation, among other things, provides small businesses with $12 billion in tax breaks and funnels $30 billion in low-interest funds to community banks to make loans to small businesses. Democrats believe the law could create 500,000 jobs.

But these are strange days. Economists say the recession is over, but it doesn’t feel like it to many folks. Bankers are still skittish from the financial market meltdown and mainly greet the new stimulus act with caution. And a midterm election is just weeks away, meaning any new legislation from Washington gets tainted by partisan politics.

Consider the divergent reactions of Rep. Melissa Bean (D-8th), who authored portions of the act, and Republican Joe Walsh of Grayslake, her opponent in the Nov. 2 election in the 8th Congressional District.

Bean believes the Small Business Jobs Act is just the kind of stimulus package needed to ignite the economy.

“Jobs in our community are created by businesses in our community, and providing an environment for small business growth will strengthen our ongoing economic recovery,” Bean said.

Walsh unfavorably compares the legislation to the Troubled Asset Relief Program, or TARP, which bailed out big banks, and Health Care Reform.

“This is just another example of Melissa Bean and the Democrats and their continued spending spree,” Walsh said. “All this will accomplish will be to drive us deeper and deeper into debt.”

With opinions clearly delineated along party lines, we’ll let the facts speak for themselves.

The Small Business Jobs Act was passed by the U.S. House on Sept. 23, following approval by the Senate a week earlier. Only one Republican voted for the package in the House, and only two in the Senate.

The key provisions in the act:

•    $12 billion in small business tax breaks, including more generous tax write-offs for the purchase of property and equipment, and an accelerated depreciation schedule for capital expenditures. Additionally, there is a capital gains tax exemption on small business stock purchased in 2010, and tax credits for certain small business health insurance costs.
•    A $30 billion pool of low-cost money available to community banks to increase lending to small businesses. The measure also contains several provisions related to Small Business Administration (SBA) lending, such as a continuation of the SBA’s 90 percent loan guarantee, and the waiving of SBA loan fees, both passed previously under the American Recovery and Reinvestment Act of 2009. It also increases SBA loan limits from $2 million to $5 million, and microloans from $35,000 to $50,000.

The cost of the bill will be covered through the closing of certain small business tax loopholes and increased tax reporting requirements and penalties.

Reaction from area small businesses generally has been enthusiastic.

“It will be a job creator. I really think it will jumpstart the economy,” said Sandra Westlund-Deenihan, president of Quality Float Works Inc., the Schaumburg-based maker of float balls for water systems, gas pumps and other uses.

While Westlund-Deenihan doesn’t anticipate immediately borrowing money made available by the act, she expects some of her customers will, which will be good for Quality Float Works.

“This will have a ripple effect. Our customers will have access to credit, which will allow them to expand, which will mean they will buy more products from us,” Westlund-Deenihan said.

Reaction from area community banks has been more muted. Some local bankers who were contacted said they weren’t aware of the act or needed time to study it before commenting.

Bruce W. Lammers, president and CEO of Ridgestone Bank in Schaumburg, is one community banker excited by the act. As one of the largest SBA lenders in Illinois, Ridgestone welcomes the additional credit and government guarantees for small businesses, Lammers said.

“Small businesses have been asking for additional credit to be made available and I think this is a good step,” Lammers said. “I think this is a way to get people to start to spend a little bit, which will help the economy.”

Small businesses have been eager for action from Congress to loosen the tight credit market, said Judith A. Roussel, director of the SBA’s Illinois office.

The SBA has a national backlog of more than 1,400 loan applications totaling $730 million from small businesses waiting to see if the waiving of loan fees passed under the American Recovery and Reinvestment Act of 2009 were going to be extended by the Small Business Jobs Act. Now that they are, Roussel said the SBA can process those loans.

“The processing of those loans alone is going to create activity,” Roussel said. “I think the Small Business Job Act is going to be a positive for the economy. Small businesses account for 80 percent of the new jobs created in this country, so giving them an opportunity to invest and grow is good.”