Obama's State of the Union Address: What it Means for Small Businesses

On January 27, President Obama gave his state of the union address after holding office for his first full year. In the last year, there has been an increased unemployment rate (up to a national rate of 10% in November 2009) and a decreased approval rating for the President’s efforts. While the American Recovery and Reinvestment Act of 2009 did promise $787 billion in tax benefits, grants, and loans, only $268 billion was paid out. What does all this mean for new and struggling small businesses in 2010?

President Obama spent two-thirds of his speech on economic recovery, with a top focus on small business and job creation. With this kind of concentrated effort, small businesses can hope for greater help from the U.S. government.

Obama’s New Proposals for Small Businesses

The list on the small business improvement agenda includes a proposal to eliminate capital gains taxes for small business investment, tax incentives for hiring new employees, and redirecting $30 billion of Wall Street bailout money to small-town banks and small businesses.

These proposals are indeed encouraging for small business. In fact, Obama stated, “We should start where most new jobs do–in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss.” If what the President says is true and his proposals are approved, small businesses should get a big shot in the arm through government aid.

Turning Proposals into Policy

However, if you visit Obama’s speeches prior to his election in 2008, you will find that his speeches have carried much the same tone. Even in 2008, Obama stated that government should provide tax-breaks to small business and encourage investment. With his last full year in office spent focused on health care and overall economic stimulus, we should hope that President Obama’s words will soon become policy and law.

If these proposals do become policy, small businesses might expect a tax credit up to $1 million for hiring more employees, additional money to be loaned to small businesses through government guarantees, relaxed export laws to help small business grow overseas, and additional tax relief for small businesses for expanding and investing in capital.

2010 will be a year of change for small business. With economic indicators looking brighter and positive words emanating from the White House, if small business owners can weather the storm through 2010, they will likely see additional prosperous years in the future.

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