SBA Loans from Jobs Act

One Week Later, Nearly 2,000 Small Businesses Approved for SBA Loans Due to Jobs Act

Posted by SBA Administrator Karen Mills on October 05, 2010 at 04:04 PM EDT

Late yesterday, just a week after President Obama signed the Small Business Jobs Act of 2010, nearly 2,000 small business owners who had been waiting for SBA-backed loans had been approved and will soon have those loan funds – totaling nearly $1 billion – in hand.  That’s a quick turnaround, and it’s an example of this Administration’s deep commitment to giving entrepreneurs and small business owners the support they need to grow and create jobs.
Here’s how we made it happen.
After the Recovery Act passed last year, SBA increased the guarantee and reduced the fees in our top two loan programs.  That two-part formula worked.  We saw a significant rebound in SBA lending, helping unlock much-needed capital for small businesses.  All told, SBA took just $680 million in taxpayer dollars and turned it into nearly $30 billion in lending support to about 70,000 small businesses.  That’s a strong bang for the taxpayer buck.
Even though Congress renewed funding for the increased guarantee and waived fees several times, SBA had to stop making these loans in May when the agency’s authority for the higher guarantees ended.  Shortly thereafter, the funds for fee waivers were used up.   As a result, we had to start putting applicants on a stand-by waiting list – a “queue” – hoping that these successful loan enhancements would once again be available.
Over the summer, that queue grew to include more than 1,000 entrepreneurs and small business owners.  The Administration continued to push for Congress to pass a small business jobs bill, knowing that these small businesses – and many more – were ready to start growing and creating jobs as soon as they got their SBA loan.
Finally, last week, with the stroke of the President’s pen, the SBA got $505 million more for these effective and proven enhancements, which will support an estimated $14 billion in new lending.
As of late yesterday, just one week later, we had pushed out nearly 2,000 loans – clearing out all the loans in the queue. And, today we’re moving ahead with approving thousands more SBA Jobs Act loans.  With each loan, we’re putting capital in the hands of America’s entrepreneurs and small business owners so they can continue to drive economic growth and create jobs in communities all across the country.  And this is just one of the many benefits in the Small Business Jobs Act, which can now deliver $55 billion in tax cuts and additional assistance for businesses that need loans.

Karen Mills is Administrator of the Small Business Administration

Hobby or a business? An IRS view.

Yesterday I wrote about several possible small business opportunities, many easily done and with little to no startup cost. One of these involved turning a hobby into a money-maker. Naturally, of course, there are potential tax implications from such a move. If one intends to mix business and pleasure, be aware of the IRS rules and regulations. The following are taken directly from the IRS small business site:

"In order to make this determination (hobby vs business), taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years,including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses."

The entire IRS opinion is here: www.irs.gov/newsroom/article/0,,id=169490,00.html

Remember, always do your homework and don't cause trouble with the powers-that-be!

- AJ