WASHINGTON (9/17/10)--The U.S. Senate Thursday passed H.R. 5297, the Small Business Jobs and Credit Act, by a vote of 61 to 38. Credit unions launched a valiant effort to back an amendment to the bill that would have increased the member business lending (MBL) cap, but in the end the bill was passed with a $30 billion fund to encourage more bank lending, but without the MBL provision. The bill does have items of interest to credit unions. For instance, it includes higher Small Business Administration (SBA) loan limits, increasing SBA 7(a) loan limits to $5 million from $2 million, 504 loan limits to $5.5 million from $1.5 million, and 7(a) "Express Loans" to $1 million from $300,000. The bill also ups the definition of microloans from $35,000 to $50,000. Other provisions in the bill would:
* Allow, starting in 2011, retirement savings plans sponsored by state and local governments (governmental 457(b) plans) to include Roth accounts, which are currently available only in 401(k) and 403(b) plans: * Allow 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account; * Appropriate $505 million to extend through the end of this year some of the Stimulus Act provisions such as eliminating borrower fees on SBA 7(a) and 504 loans, as well as extending the increased government 90% (up from 75%) guarantee on 7(a) loans: and * Provide $1.5 billion in grants to existing state small business programs that help private lenders extend more credit to small businesses.
The bill also would temporarily shorten the holding period of assets subject to the built-in gains tax to five years if the fifth taxable year in the holding period precedes the taxable year beginning in 2011. One-third of U.S. banks are organized as Subchapter S banks. The bill now must go back to the House for a vote because the Senate modified the bill originally passed by the House.