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American Recovery and Reinvestment Act: Spurring Job Creation by American Businesses Large and Small

American businesses, large and small, are the engine of the economy.  The American Recovery and Reinvestment Act expands opportunities for small business, and contains incentives for businesses to invest in new plants and equipment.  The measure will strengthen a broad range of businesses, such as renewable energy, construction and manufacturing, and information technology, which are critical to creating jobs now, as well as transforming our economy for the 21st Century.  

“We strongly support a number of provisions in the American Recovery and Reinvestment Act scheduled for debate this week. This legislation - which combines targeted tax incentives and increased investment in areas critical to our competitiveness - will help get our nation's economy back on track and ensure job creation and sustainable economic growth.”

National Association of Manufacturing [1/27/09]

The measure is supported by a broad range of business organizations, including the American Wind Energy Association, National Association of Realtors, Technet, Retail Industry Leaders Association, National Black Chamber of Commerce, and the Independent Community Bankers of America.

Creating Small Business Opportunities ($880 million)

  • Spurs more than $13 billion in small business loans, with guarantees needed to make loans more attractive to lenders and to free up capital for small businesses.  By allowing the Small Business Administration to play a more active role and by unfreezing credit markets, this will give smaller firms access to the capital they need to stay afloat, create jobs and help drive an economic recovery.
  • Guarantees up to $2 billion in loans for rural businesses at a time of unprecedented demand due to the credit crunch.  Private lenders are increasingly turning to this program to help businesses get access to capital.  
  • Strengthens small manufacturers' productivity and competitiveness by providing them with access to technology.  ($30 million for Manufacturing Extension Partnership)
  • Supports high-risk, high-reward, pre-competitive technology development, with high potential for public benefit, focusing on small and medium-sized companies.  ($70 million for Technology Innovation Program)
  • Invests in Economic Development Assistance (EDA) to address long-term economic distress in urban industrial cores and rural areas, distributed based on need and ability to create jobs and attract private investment.  Every $1 in federal EDA funds leverages $10 in private investments.

Business Tax Incentives to Create Jobs and Spur Investment ($93 billion over two years; $20 billion over 10 years)

  • Allows businesses to improve cash flow by providing a 5-year carryback of net operating losses (NOLs).  This would allow businesses to write off 90% of losses incurred in 2008 and 2009 against taxes assessed over the previous five years (current law limits NOL carryback to the previous two years).  This would not be available to companies that have benefited under the TARP.
  • Provides immediate tax cuts for all businesses to invest in new plants and equipment in 2009 by speeding up depreciation provisions, so that firms can write off an additional 50 percent for these investments in new plants and equipment.
  • Spurs small business investment by extending small business expensing, which doubles the amount small businesses can immediately write off their taxes for capital investments made in 2009 from $125,000 to $250,000, for purchases of new equipment of up to $800,000 (from $500,000).
  • Provides businesses with relief by repealing the mandate that federal, state, local governments withhold 3 percent of payments to businesses for goods and services, which is strongly supported by the National Small Business Association.
  • Provides incentives to create new jobs with business tax credits for hiring recently discharged unemployed veterans and youth that have been out of work and out of school for the 6 months prior to hire.

Growing Businesses under the Recovery Plan  

  • Rebuilding America's Highways, Bridges, and Other Infrastructure (Over $100 billion): Businesses in construction and manufacturing will get a boost from the large investments in infrastructure, including repairing and modernizing thousands of miles of roadways in the U.S., providing new mass transit options for millions of Americans and cleaning up our water.  These provisions in total would create about 1.5 million American jobs.  The measure's investment in rebuilding and renovating public housing, schools, and federal buildings, will also help spur these beleaguered industries.
  • Spurring Renewable Energy: For renewable energy firms, such as wind and solar, the bill includes critical provisions, such as those that:
    • Provide a three-year extension of the production tax credit (PTC) for electricity derived from wind (through 2012) and for electricity derived from biomass, geothermal, hydropower, landfill gas, waste-to-energy and marine facilities (through 2013).  
    • Make grants for businesses that place new renewable energy facilities in service during the next couple years for up to 30 percent of the cost, in order to help speed up investment in new facilities and to address current renewable energy credit market concerns.
    • Create temporary loan guarantees of up to $80 billion for renewable energy power generation and electric transmission projects that begin in the next two years, in order to help ease credit constraints for renewable energy investors and spur new private sector investment.
    • The American Wind Energy Association:  “This bill includes critically important provisions to ensure that wind power and other renewable energy sources continue to grow through the economic downturn. …This measure is vital to continuing renewable energy growth, creating hundreds of thousands of American jobs as we strengthen our energy security and help protect our planet's climate.”
  • Making Homes, Schools and Buildings More Energy Efficient:  For those who rebuild and renovate our homes and buildings for energy efficiency and savings, including many small businesses such as plumbers and electricians, the bill includes provisions to:  
    • Improve the energy efficiency for more than 1 million modest-income homes through weatherization;
    • Modernize our schools and colleges and make key energy efficiency upgrades to public housing and HUD-assisted housing with new insulation, windows, and furnaces.
    • Make an historic investment in upgrading federal buildings and making them energy efficient -- as part of an effort to modernize 75% of federal buildings and save taxpayers $2 billion per year in lower federal energy bills.
  • Innovation through Science & Technology:  The recovery package also includes nearly $40 billion in investments in America's IT network infrastructure (including broadband, health IT, and a smarter energy grid).  More than 100 high-tech CEOs and business leaders have endorsed these IT investments and stated that this $40 billion investment alone will create more than 949,000 U.S. jobs, more than half of which will be in small businesses.   
    • Investing in extending broadband and wireless services to underserved communities across the country, thereby growing businesses that procure, produce, deliver, install, and maintain new infrastructure, as well as sectors of the economy that rely on e-commerce, including the retail, education, health care, and real estate.
    • Providing funding for the aggressive adoption of Health Information Technology systems will create hundreds of thousands of jobs - many of them in high-tech sectors, including computer hardware manufacturing and information technology services.