Restaurants and other small businesses will benefit from legislation approved Thursday in Congress.
The House of Representatives voted 237 to 187 to approve a bill to ease small business access to credit and extend certain tax incentives to restaurant renovation.
The Senate voted Sept. 16 to approve the Small Business Jobs and Credit Act, supported by the National Restaurant Association. President Obama is expected to sign the bill into law next week.
The National Restaurant Association, which supported the bill, hailed the House vote. The bill will help restaurants and small businesses through tax relief and give them access to capital that is critical to economic and financial recovery, said Scott DeFife, vice president, policy and government affairs, NRA.
"Households are still holding back on spending," he noted. "As a result, many restaurant operators continue to struggle."
The bill will expand expensing limits under Section 179 of the tax code. It will allow small businesses to write off $500,000 of capital expenses instead of $250,000 through 2011. That means restaurant operators could write off up to $500,000 of equipment costs, such as new point-of-sales systems the year they bought the equipment, rather than recovering all of the cost over a multi-year depreciation schedule.
The bill also will extend Section 179 expensing limits to restaurant structural improvements, new construction, and leasehold and retail improvements. As part of the proposed $500,000 limit, operators can expense $250,000 of those costs the year they incur them, through 2011.
Currently, restaurateurs can recover such costs only through a 39½-year depreciation schedule. A temporary 15-year depreciation schedule expired at the end of 2009. The NRA is urging Congress to reinstate the 15-year schedule for 2010.
The legislation also would create incentives for small, community banks to lend to small businesses. Specifically, it will:
. Establish a $30 billion small business lending fund.
. Increase Small Business Administration loans to $5 million from $2 million.
Continue to eliminate through year-end fees on such loans.
. Continue through year-end a 90 percent federal guarantee on such loans.
. The NRA believes the incentives will make it easier for restaurateurs to obtain Small Business Administration-backed loans to invest in their businesses.
The expanded expensing limits and greater access to credit help restaurant operators make necessary investments, hire and retain workers and in some cases, keep their doors open, DeFife said.
"The modernization of popular Small Business Administration loan programs, the inclusion of refinance options, and extension of expiring loan guarantees and borrower fee reductions will go a long way to help small businesses in this difficult credit climate," he said.
