Small business owners, defined as people who receive at least 50 percent of their income from a business with fewer than 500 workers, also will see a reduction in their estimated tax bills, thanks to stimulus legislation.
In the past, these businesses had to give Uncle Sam up to 110 percent of their previous year's tax liability through quarterly payments. Now, they only have to pay 90 percent of their 2008 tax bill when making estimated tax payments during 2009.
The reduction in estimated taxes will do some good, Rys says.
"It lets small business owners hold on to more cash now," he says. "That certainly addresses the cash flow problems we see a lot of businesses having."
A change in the alternative minimum tax wasn't specifically directed at small businesses -- but it certainly will help them. The law raises the 2009 exemption from the AMT to $46,700 for single people this year and to $70,950 for married couples.
Many of those paying the AMT are small business owners. However, some AMT tax relief is scheduled to expire after this year.
"We would like to see the change made permanent," Brogan says.
Nearly all of the new tax benefits are slated to expire after this year, including all those cited in this story. The narrow focus and short-term duration of the tax changes dilute their effectiveness, Kerrigan says.
"These provisions are too little, too timid and too late for many small businesses," she says.
To learn more about the tax breaks and how to take advantage of them, contact your accountant or lawyer, or check with the Internal Revenue Service. The IRS Web site has a section for small businesses and the self-employed.
The stimulus package also provides $730 million to Small Business Association efforts to help entrepreneurs. About $375 million of this money is headed for the SBA loan guarantee program and to reduce borrower and lender fees owed to the SBA.
The SBA offers partial guarantees on loans made by private lenders to small businesses. Currently, the SBA guarantees 85 percent of loans up to $150,000 and 75 percent of loans bigger than that.
Thanks to the recession and financial crisis, SBA loan issuance has plunged, with the volume of new SBA loans totaling $2.76 billion from Oct. 1, 2008 through Feb. 20. That's down a whopping 42 percent , from $4.77 billion, in the year-earlier period.
The government hopes to improve spur new lending by increasing the SBA's loan guarantees to as much as 90 percent of a loan's value.
The legislation also temporarily reduces or eliminates loan fees paid to the SBA by small business borrowers and banks. Borrowers currently pay fees to the SBA of 2 percent to 3.5 percent of the loan total, depending on the loan's size, while banks make ongoing payments that total 0.55 percent of their loan balances. These breaks, of course, make it cheaper for banks to lend and for businesses to borrow.
Stimulus legislation also includes a $255 million program to provide loans of up to $35,000 for small businesses to make payments on loans they already have outstanding. The idea is to help businesses cut their debt burden. The new loans are interest-free, and repayment does not have to start until one year after the loan is issued.