Jobs measure seen as plus for small businesses
![]() |
Download story podcast | |
01:59 PM PST on Thursday, December 10, 2009
President Barack Obama's proposals that could grease the wheels for small business owners who want to hire more workers are being viewed as positive moves by Inland area entrepreneurs and some of the officials that work with them.
Some of the measures, which were announced Tuesday as part of Obama's latest economic initiative, are drawing praise but are considered stop-gap measures for small businesses worried about surviving the recession.
Others like the ideas but question whether the federal government can get the assistance to where it needs to go quickly enough, and one small business executive says the proposals, while addressing business owners' problems, miss an important one: not enough customers.
The proposals include eliminating capital gains taxes if a new investment is held for at least five years; extending a law allowing write-offs on up to $250,000 of new investments; a cut in employment taxes; and eliminating fees on Small Business Administration loans and making these federal loan guarantees more easily available.
Two-thirds of the jobs created in Riverside and San Bernardino counties are started by companies with fewer than 100 employees, according to the Inland Empire Small Business Development Center, a counseling service that is part of the Inland Empire Economic Partnership.
The measures, if adopted, would address some of the concerns of small business owners. The capital gains break and tax write-offs could encourage them to invest in new equipment. That could spur the need for new workers.
Also, SBA guarantees could open the door for credit during a period when banks have been unwilling to loan money for new investments.
Most of the initiatives are needed, said Vincent McCoy, executive director of the Inland small business group.
"It's got to happen relatively quickly," McCoy said. "It has to be business-focused and has to be made relatively easy for businesses to access."
McCoy said he likes the part of the Obama jobs initiative that would focus on infrastructure improvements because many companies that would do the work on roads and other public projects are small- and medium-sized firms.
Part of the struggle small businesses have been facing involves lenders that have tightened their standards. They are looking for higher credit scores and tangible assets for collateral.
More backing from the SBA, which facilitates federal guarantees for loans, would probably help, said Nancy D. Sidhu, chief economist for the Los Angeles County Economic Development Corp.
"That tells the banks that not as much of their money will be at risk," Sidhu said. "None of these things is a slam-dunk, but it does change the prospects when banks look at small businesses."
Brad Adams, owner of Sunstone Components Group Inc., a Temecula company that makes automotive parts, said the measures make sense. But a business owner has to look past short-term advantages before he hires new workers.
"There's a little short-term savings there, but it's probably not going to influence a decision," Adams said.
Francisco Castenanda, sales and marketing manager for Merrick Engineering, a Corona firm that makes hangers, shoe racks and other home storage items, said he understands what Obama is trying to accomplish. But he said the double-digit unemployment rate is a bigger problem because it keeps consumers home.
"If no one is buying the products, then there's not much gain from making it easier to borrow," Castenada said.
Nick DeMartz, business services supervisor for the San Bernardino County Department of Workforce Development, said most of the businesses he talks to won't see much benefit from the capital gains break. But the initiatives that give firms an incentive to hire are "a good start."
DeMartz said usually small businesses are not looking for major, SBA-backed loans to finance new buildings. They need smaller short-term loans to fix or replace the machine that makes the product that ensures the business owner can meet his or her payroll.
Reach Jack Katzanek at jkatzanek@PE.com or at jkatzanek@PE.com
Small firms,
big issues
Proposals in the Obama jobs initiative:
Capital gains: Eliminating taxes on new investments 2010 if the investments are held for at least five years.
Write-offs: Extension through 2010 of a law that allows immediate tax write-offs on up to $250,000 of investments.
Employment tax: An employment tax cut through 2010 to encourage hiring.
Lending: Making loans more readily available by eliminating fees and increasing federal loan guarantees in 2010.
Source: The Associated Press
Comment on this story
Guidelines: We welcome your thoughts, but for the sake of all readers, please refrain from the use of obscenities, personal attacks or racial slurs. All comments are subject to our terms of service and may be removed. Repeat offenders may lose commenting privileges.

