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As The 2020 Election Kicks Off, A New Senate Bill Looks To Help Small Business Owners

As The 2020 Election Kicks Off, A New Senate Bill Looks To Help Small Business Owners

Despite the end of the impeachment saga and the ongoing race to the national election in November, some bipartisan legislation is gaining traction within the U.S. legislature. A new bill introduced to the Senate last month hopes to allow entrepreneurs and small business owners another way to generate much-needed financing for the year ahead. 

Co-sponsored by Senators Cory Gardner (R-CO) and Gary Peters (D-MI), the Small Business Start-up Savings Act would allow small businesses to create tax-deductible start-up savings accounts. This bill intends to help Americans on their small business journey—whether they are starting a business, or expanding an existing one.

“Having grown up in a family-owned business, I’ve seen firsthand how difficult it can be to run a small business, make payroll, build capital, and comply with a complex regulatory system,” said Sen. Gardner in a press release about the new legislation.

Common Ways To Finance

Should it proceed, the bill will provide American entrepreneurs assistance in one of the most common ways small businesses achieve financing. According to the Small Business Administration, personal and family savings are by far the primary way small businesses sustain themselves. 

Of course, business loans are still a major factor in finding outside financing to supplement these funds. We spoke with Jeffrey Bumbales, Director of Marketing with fintech lender Credibly to get perspective on how the legislative act might impact the financing options available for entrepreneurs looking to expand their new or existing business.

“Having ample initial capital is crucial for growing your business from a pre-revenue stage, and it's no secret that personal savings and capital from family and friends are frequently invested in early-stage businesses,” said Bumbales. “Doing so helps the company accelerate revenue to be reinvested in growth, while simultaneously positioning the company to obtain larger sums of financing from lenders who place more emphasis on cash flow than credit history.” 

The S.3136 bill has been endorsed by the National Federation of Independent Business (NFIB), the nation’s largest small business group. Senior Director of Federal Government Relations at NFIB, Kevin Kuhlman, believes this legislation will help small businesses with, “cash flow, expenses, and investment; encouraging economic growth.”

Tax Concerns In An Election Year

The new savings incentives come in the wake of 2017's sweeping tax overhaul, which has apparently worked its way through the small business ecosystem. 

The results of a 2019 fourth-quarter survey of small business owners from polling firm Gallup show that 21% of small business owners cite taxes, fair taxation, and tax relief as the most important issues they would like candidates for office to focus on. 

While businesses remain overall optimistic, small business owners are seemingly no longer anticipating benefits from the Tax Cuts and Jobs Act. Part of this is due to the fact that the majority of tax breaks enacted for small businesses is that they aren’t permanent, making it difficult for business owners to make long-term decisions. 

“We haven't really seen this play out in full but one would anticipate that banks and other longer-term lenders tighten their credit box to manage risk. Our capital solutions are pretty short term, so we would be happy to continue lending accordingly,” said Bumbales.

Given it stands to reason then that freshmen Senators Gardner and Peters (both of whom are running for re-election this year) attached their name to the new bill. 

Sen. Peters, in particular, has been unequivocal in his advocacy. “I urge the Senate to advance this commonsense bill that would help address a challenge many of our Michigan entrepreneurs and small businesses face,” said Sen. Peters.

One of the main issues business owners have run in to with tax breaks enacted for small businesses is that they aren’t permanent. This issue makes it difficult for business owners to make long-term decisions. Referencing the 2017 Trump Tax Cuts, though the tax cuts helped some businesses save money, the continued effects of these tax cuts are not guaranteed and in other cases, expire.

Now Is The Time

With high tax rates and a lack of capital, starting a business may seem like an endeavor for a select few. 

In reality, there are currently more than 30 million small businesses in the U.S. and according to the Small Business Administration, small businesses generate 8.4 million jobs—more than ⅔—of the new net jobs created in the market. 

A lack of capital can be discouraging, but in this booming economy with more small business legislation like this one and online loan providers being readily available, 2020 might be a good time to start or expand your business. 

Image source @ Pixabay


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