Small-business bill may aid lending

The federal small-business bill could spur additional lending in the area, but others aren't convinced it will lead to a lot of businesses taking out new loans.

The bill, which passed the Senate last week and is expected to be approved by the House this week, would create a $30 billion small-business lending fund and provide $12 billion in tax breaks to spur companies to invest and hire more workers.

It also includes a provision to extend the waiving of Small Business Administration loan fees and the 90 percent loan guarantees that were part of the 2009 recovery package. And it would increase the loan sizes of some of the SBA's loan programs.

"It's got some attractive things in it that should have a broad impact on small business," said Wayne Bell, district director for the SBA's Wichita district office.

Brian Chamberlin of RelianzBank said the extension of the waiving of fees alone should be a big inducement for small businesses to apply for SBA-backed loans.

"That's a huge benefit for small businesses," said Chamberlin, executive vice president of the bank, which is an SBA lender. He said the fees alone on SBA-backed loans can be significant.

Chamberlin said the extension of the 90 percent guarantees is a big incentive for banks to continue making SBA-backed loans.

"It does remove a lot of risk" for banks, he said.

But Alex Williams, president of Halstead Bank, also an SBA lender, is unsure whether the bill will have much of an effect on lending.

"In the current environment, I just don't think we're seeing the demand from the business person to go out and expand," Williams said.

Tim Witsman, president of the Wichita Independent Business Association, said too many unknowns remain about what is going to happen with federal tax rates this year so many of his organization's members are reluctant to take out loans right now for expanding their businesses or purchasing new equipment.

"We'll take it," Witsman said of the bill. "The problem is what people would rather have is certainty on the other things."

The bill also would allow small businesses to write off more of their costs of buying equipment or making shop improvements. Those who are self-employed could deduct health care costs from the self-employment tax.

The $15 billion cost of the bill is offset by closing tax loopholes and increasing tax-reporting requirements and penalties.