U.S. Rep. Gary Peters Applauds President Obama for Taking Action to Help Small Business07/11/12
Congressional Action Still Necessary to Help Small Businesses Create Jobs and Compete for Federal Contracting Opportunities
Washington, D.C. - Today U.S. Representative Gary Peters applauded a slate of six new initiatives by the Obama Administration to help small businesses expand and create jobs. Five of these initiatives are immediate executive actions that will accelerate Federal payments, reduce paperwork, and make it easier for small firms to access loans and tax credits, and one is a legislative proposal to raise the amount of investment small businesses can expense next year.
“I strongly support the actions taken by the Obama Administration to help small businesses access loans and tax credits and ensure small business contractors are paid on time,” said Rep. Peters. “While these are common sense steps in the right direction, there is still a lot of work to be done. Congress must work in a bipartisan manner to pass legislation allowing small business an increased write off for capital expenditures next year, as called for by President Obama. I will keep fighting to expand contracting opportunities for small businesses.”
Peters, a member of the House Small Business Committee, has worked with his colleagues to advance two packages of bills to help level the playing field for small business contractors: these bills were approved by the Small Business Committee on March 7, 2012 and March 22, 2012 and await a vote by the full House of Representatives. To provide additional support for small businesses in the federal procurement process, Rep. Peters introduced H.R. 6078, the Small Business Contracting Opportunities Expansion Act of 2012.
Background on Small Business Contracting:
THE IMPORTANCE OF SMALL BUSINESS GOVERNMENT CONTRACTING
• Significant portion of federal budget spent on procurement: The federal government spends nearly $540 billion in contracting for goods and services every year, with a goal of awarding 23% of prime contract dollars to small businesses. The federal government awarded $97.9 billion in prime contracts to small businesses in 2010.
• Contracting goals for targeted groups: The federal government sets contracting goals for small businesses owned by members of specific groups. This includes $17.4 billion to women owned small businesses, $34.4 billion to small disadvantaged businesses (SDBs), $10.8 billion to service disabled veteran owned small business, and $12.0 billion to small businesses in HUBZones.
• Chance to directly invest in small businesses, save taxpayer dollars and create jobs: Government contracting provides a critical opportunity to invest in small businesses and boost our economy. Small businesses create two out of every three new jobs, and they have shown that they can fulfill government contracts cheaper and often quicker than larger contractors.
WHO QUALIFIES AS A SMALL BUSINESS AND AS A SMALL DISADVANTAGED BUSINESS (SDB)
• Size standards: The Small Business Administration has significant discretion as to what firms qualify for small businesses, but they must be “independently owned and operated.” Small businesses are generally defined by the government as having fewer than 500 employees or less than $7 million in average annual sales.
• Socially and economically disadvantaged small businesses (SDBs): Economic disadvantage is determined by personal net worth and statements submitted to the SBA. Social disadvantage includes a broad array of groups including: Black Americans; Hispanic Americans; Native Americans; Asian Pacific Americans and members of other groups designated by SBA.
RECENT DECLINE IN MINORITY CONTRACTS
• First drop in a decade: U.S. government contracts to Black-and Hispanic-owned small businesses fell in FY 2011 for the first time in a decade, declining at a sharper rate than awards to all companies. Contracts to the Black-owned firms dropped 8% and Hispanic-owned businesses decreased 7% compared to 2010.
• Disproportionate impact: Contracts to the these two groups fell at a significantly faster pace than all contracts, which dipped 1% as the U.S. government slowed spending to help reduce the federal deficit.
REP. PETERS’ SMALL BUSINESS CONTRACTING OPPORTUNITIES EXPANSION ACT OF 2012
• Immediate increase in SDB goal: This legislation would immediately increase the SDB government-wide contracting goal from 5.0% to 6.0%, a 20% increase that represents $5.5 billion in contracts. It would also immediately increase the government-wide contracting goal for all small businesses from 23% to 26%, providing an additional $16 billion in contracts.
• Backslide prevention: Some agencies are significantly exceeding the government-wide goal that sets the floor for their small business contracting. They should have a new goal that reflects their achievement. This legislation would create new, agency-specific goals that reflect an average of their past three years. For example, if an agency had 6.0% participation by SDBs in 2009, 7.0% participation in 2010, and 6.5% participation in 2011, its goal for 2012 would be 6.5%.
• Studies on improving small business contracting: Studies on internal government processes, increasing outreach, and recommended legislative action will help increase contracting participation by targeted groups in coming years. An additional study on creating a new government-wide classification and goal for contracting with veteran owned businesses is also commissioned.
• Increase in government-wide goal for targeted groups after studies: After completion of the studies, the government-wide goal for all small businesses would be increased from 25% to 27%, SDB’s would be increased from 6.0% to 7.5%, women-owned businesses would be increased from 5.0% to 6.0%, and HUBZone businesses would be increased from 3.0% to 4.0%.
Background on Obama Administration Action:
OBAMA ADMINISTRATION TAKES IMMEDIATE ACTIONS TO HELP SMALL BUSINESSES
WASHINGTON, DC -- The President believes that entrepreneurs and small businesses are engines of innovation and economic growth and are at the forefront of the nation's economic recovery. This is why the Obama Administration has worked to enact 18 small business tax cuts and numerous measures to help more small businesses access the credit they need to invest, hire, and grow.
Today, the Obama Administration is announcing additional initiatives that build on this record of progress and will help our nation’s small businesses expand and create jobs. Five of these initiatives are immediate executive actions that will accelerate Federal payments, reduce paperwork, and make it easier for small firms to access loans and tax credits, and one is a legislative proposal to raise the amount of investment small businesses can expense next year.
(1) Accelerate payments to small business subcontractors: Through the Office of Management and Budget, the President will direct agencies to make contract payments along an accelerated timeline to all prime contractors for the next year (typically 15 days after receipt of proper documentation, as opposed to 30 days), with the understanding that those prime contractors will similarly accelerate payments to their small business subcontractors.
(2) Announce support for Section 179 expensing at $250,000 for one year (requires legislation): President Obama is calling on Congress to let small businesses write off up to $250,000 in capital investments in 2013, such as machinery and equipment, to drive productivity. This builds on the President’s proposal for 100% expensing for all firms in 2012. Because an increase in Section 179 expensing was part of the 2001 / 2003 tax cuts, this proposal is included in the President’s call for extending those tax cuts for the middle class next year. Without that extension, the expensing limit for small businesses is scheduled to decline to only $25,000 in 2013.
(3) Increase access to capital through SBA’s Small Loan Advantage (SLA) 2.0: SBA is re-launching Small Loan Advantage, one of its key small dollar loan products, as SLA 2.0. This revamped program raises the maximum loan amount from $250,000 to $350,000, streamlines the loan process, and makes it easier for lenders to extend loans to small businesses across America.
(4) Launch “Quick App” for surety bond guarantees under $250,000: SBA is launching “QuickApp,” a streamlined application that will eliminate the need for contractors to complete five unnecessary forms to apply for surety bonds. Providing small firms, particularly in the construction industry, streamlined access to these bonds will make it easier for them to compete for and win additional business, which is important to allowing them to expand and create jobs.
(5) Reduce paperwork for SBA’s Disaster Loan Program: Cutting the online application from 80 screens to three or four screens (depending on loan type) will allow families and businesses easier and quicker access to support for rebuilding after a disaster.
(6) Align New Markets Tax Credit with the needs of investors in growing small firms: The Obama Administration is working on a set of regulatory reforms to the existing New Markets Tax Credit that will make it easier for community development entities (CDEs) to attract private sector funds for investment in startups and small businesses operating in lower?income communities. The forthcoming regulations are designed to encourage CDEs to invest in other types of small local businesses by relaxing the reinvestment requirements for CDEs investing in certain operating businesses. The Treasury Department is also considering regulatory reforms that would further simplify the requirements for these CDEs and intends to publish these for comment in the future.