WASHINGTON (2/17/09)--Provisions contained in an economic stimulus package signed into law by the president on Monday could benefit credit unions by widening member business lending opportunities. News Now
previously reported on the provisions before the stimulus package was approved by both the Senate and the House. Credit unions engaged in Small Business Administration (SBA) 7(a) and 504 lending would benefit from a provision in the package that would raise the percentage of a loan that the SBA can guarantee to 90% from 85%. Credit unions benefit from the increase because the guaranteed portion of such loans does not count toward the member business lending cap of 12.25%. Other SBA provisions in the package:
* Allow small businesses to refinance existing debts under the SBA’s 504 program; * Provide $30 million for the SBA’s microloan program, which provides loans and technical assistance for low-income entrepreneurs and laid-off workers starting their own business; and * Reduce to zero the fees for borrowers on SBA-backed loans.
Two other items in the package would extend tax provisions in last year’s housing rescue bill, H.R. 3221, through 2009. The first provision would allow small businesses to recover the costs of capital expenditures made in 2009 faster than the ordinary depreciation schedule would allow by permitting businesses to immediately write off 50% of the cost of depreciable property. The second provision would allow small businesses to write off up to $250,000 of capital expenditures subject to phase-out once capital expenditures exceed $800,000 through 2009. In H.R. 3221, Congress temporarily increased the amount that small businesses could write off for capital expenditures incurred in 2008 to $250,000 from $125,000, and increased the phase-out threshold for 2008 to $800,000 from $500,000. Current law lets small businesses lower their tax liability by writing off the cost of certain capital expenditures in the year of acquisition instead of recovering the costs over time through the tax code’s normal depreciation schedule. “The provisions contained in the stimulus package present credit unions with ways to offer more attractive small business lending opportunities to members,” said John Hildreth, Credit Union National Association senior legislative representative.