By Erik Pages
Financial Reform Bill
Passage of the landmark financial reform bill, the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), was a major legislative achievement for Congress this year. The 2,300-page measure contains hundreds – if not thousands – of new initiatives and regulatory changes, most of which focus on preventing a recurrence of the financial problems that helped lead to the current economic downturn. The U.S. Chamber of Commerce has reported that the law proposes 533 regulatory rulemakings, 60 studies and 93 reports. Analysts expect the bill will eliminate many fraudulent practices, but some also fear that stricter regulations could further tighten the credit market for small businesses.
The Act also contains some new measures that could affect small businesses. For example, the legislation contains good news concerning the regulation of angel investment. An earlier effort that would have reduced incentives for angel investors was defeated, thanks in part to advocacy efforts led by NBIA and other associations. The new rules maintain a $1 million threshold for accredited angel investors, and block an effort that would have raised the net worth required for an individual to be designated as an accredited investor. In addition, the final measure limits the ability of the Securities and Exchange Commission to regulate specific angel investments.
Congress again has failed to pass long-term reauthorization of the Small Business Innovation Research (SBIR) program, which promotes federal R&D investments in small businesses. The law is up for a five-year reauthorization but remains in limbo, with a current extension lasting through Jan 31, 2011. (The Pentagon’s SBIR programs have been extended for one year only; the current short-term extension affects SBIR programs at all other federal agencies).
In a related move, Rep. Chris Van Hollen, D-Md., and several cosponsors have introduced a new bill designed to support firms that win SBIR grants. The Innovative Technologies Investment Incentive Act of 2010 (H.R. 5767) would provide a 25 percent tax credit for qualified investments in eligible small firms. Eligibility would be restricted to firms that previously received an SBIR grant and investments held for at least three years. The credit is modeled on similar programs operated in Maryland and other states. While it’s unlikely that Congress will pass the bill this year, it indicates that some members recognize the importance of supporting entrepreneurial technology ventures.
Manufacturing in America
House Democrats have been making a big push to revitalize American manufacturing under the “Make It in America” initiative. This effort encompasses several pieces of legislation.
The U.S. Manufacturing Enhancement Act (H.R. 4380): This bill has passed both the House and Senate. It enacts the Miscellaneous Tariff Bill (MTB), which provides relief from tariff costs for U.S. manufacturers, allowing them to access foreign resources and supplies without added taxes and duties.
Strengthening Employment Clusters to Organize Regional Success (SECTORS) Act (H.R. 1855/S. 777): Passed by the House, the SECTORS Act creates a new federal grant program to support “sector partnerships” – alliances that focus on building a stronger workforce in a given industry or cluster. The grants, to be administered by the U.S. Department of Labor, could reach as high as $2.5 million per partnership.
National Manufacturing Strategy Act (H.R. 4692): This bill creates a White House Manufacturing Strategy Board with the objective of creating a long-term National Manufacturing Strategy.
Clean Energy Technology Manufacturing and Export Assistance Act (H.R. 5156): This act creates a new $15 million fund to assist U.S. firms seeking to enter overseas clean energy markets.
End the Trade Deficit Act (H.R. 1875): This bill creates a new Commission to End the Trade Deficit, focusing on developing a new strategy to end the current trade deficit.
All of these bills have been enthusiastically embraced by the House of Representatives, but their outlook for enactment is cloudy at best. Few observers expect the Senate to accept the entire “Make It in America” package, but some of these provisions might move forward as amendments to other bills.
America COMPETES Act
Efforts to reauthorize and expand the America COMPETES Act (H.R. 5116/S. 3605) continue to slog ahead. The House has passed the bill, but the full Senate has yet to act. Given the crush of other pressing legislation, many observers fear that Congress will not act on this measure prior to adjourning for the November elections.
Health Care Reform Debate Continues
This year’s landmark health care reform bill has not yet taken effect, yet many in Congress already are introducing bills to repeal some or all of the law’s new rules. The latest comes from Sen. Mike Johanns, R-Neb. His bill, the Small Business Paperwork Mandate Elimination Act (S. 3758), would protect small business owners from the financial burden of filing the endless number of 1099 forms the health care law requires. We should expect to see more bills of this sort in the coming months.
Small Business Relief Package
In a precursor to what is likely to be a series of contentious debates over tax policy and the size of the federal budget deficit, the House failed to pass a long-awaited measure to extend additional tax relief to small businesses and to extend a number of tax credits about to expire. All sides deserve some blame for the impasse. House Democrats sought to pass a tax bill (H.R. 5982) that contained a Republican-backed measure to eliminate a proposed rule requiring that small firms must file 1099 forms for small purchases. This measure was identical to S. 3758, the legislation cited earlier. However, House Republicans considered several provisions in the bill to be tax hikes and blocked the bill’s consideration. A similar impasse occurred in the Senate, when senators failed to secure the 60 votes needed to leap a procedural hurdle and pass H.R. 5297, the Small Business Jobs Act. This bill included a host of measures to improve capital access for small firms, including expanded Small Business Administration lending programs and the extension of several tax breaks.
The National Business Incubation Association (NBIA) is the world’s leading organization advancing business incubation and entrepreneurship. Each year, it provides thousands of professionals with information, education, advocacy and networking resources to bring excellence to the process of assisting early-stage companies. An elected, voting board of directors representing the world's leading incubators governs the association.
The New Jersey Business Incubation Network (NJBIN) is a collaborative state-wide community of business experts, resources and facilities dedicated to enhancing the commercial success of early-stage entrepreneurial companies, growing higher paying jobs in New Jersey and supporting the Economic Growth Strategy for the State.
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