Doron F. Eghbali Closely Held Business Law Blog on Lawyers.com

President Obama unveiled a $30 billion program to help out small businesses. However, the program faces some hurdles and its success is not all guaranteed.

SOME DETAILS

• From TARP Funds: The $30 billion comes from the Troubled Asset Relief Program (TARP).
• To Community Banks : The $30 billion is invested in community banks to encourage them to lend to small and medium-sized businesses.
• Part of the Jobs Initiative: The $30 billion is part of a broad package of jobs growth proposals Congress will consider soon.

• Stigma: Community banks may want to avoid the "Troubled Asset Relieft Program" out of fear they would be labeled as troubled.
• Restrictions: Still regulatory restrictions could dis-incentivize community banks. Community banks did not apply for TARP, because they knew with the funds came restrictions and that would bring government into micromanaging their daily operations. However, the plan calls for reduced dividends owed to Treasury on capital investment if the banks increase lending to small businesses beyond their 2009 levels. This incentive, theoretically, mitigates the community banks worries of restrictions on the capital.
• Congressional Approval: In the highly partisan atmosphere of Washington, and the prospect of mid-term elections, both parties would want to court their respective constituents and safeguard their philosophical differences.

ANOTHER $33 BILLION TAX INCENTIVES PROPOSAL FOR SMALL BUSINESSES

• $500,000 in Tax Credits: The tax incentives would help small businesses that would add jobs or increase wages beyond the rate of inflation this year. However, note, this is still a proposal.
• Elimination of Capital Gains Taxes on Small Businesses: The Obama Administration proposed to eliminate capital gains on small businesses. For more on the tax implications of 2011 budget proposal, click HERE.
• Increase in Small Business Administration (SBA) Loans: The proposal would raise SBA loans from $2 million to $5 million.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. He Can be Reached at: 310-651-3065 or DoronEghbali@LawAdvocateGroup.com. For More Information,Please, visit Our Website Here.