The U.S. Senate passed long-delayed legislation Thursday designed to open up credit to small businesses and award them with other incentives to expand and hire new workers.
Democrats won a 61-38 vote to pass the legislation, joined by two Republicans. The measure would establish a $30 billion government fund to help open up lending for credit-starved small businesses, cut their taxes and boost Small Business Administration loan programs.
The tally gives President Barack Obama and his besieged Democratic allies in Congress a much-sought — but relatively modest — political victory with less than seven weeks to go before Election Day, Nov 2.
"It's going to make a difference in millions of small business owners across the country who are going to benefit from tax breaks and additional lending so companies have the capital to grow and hire," Obama said Thursday. "These tax breaks and loans are going to help create jobs in the short term."
The new loan fund would be available to community banks to encourage lending to small businesses. Supporters say banks should be able to use the fund to leverage up to $300 billion in loans.
The loan fund is opposed, however, by most Republicans, who liken it to the 2008 bailout of the financial system. They warn it would encourage banks to make loans to borrowers who aren't good credit risks.
Democrats say the measure is needed to help small businesses cope with a credit crunch that worsened dramatically after the financial crisis two years ago.
This legislation would also aid lending by lowering Small Business Administration loan program fees and raising loan guarantee and lending limits.
"This small business jobs bill would give small businesses $12 billion in tax cuts. It would increase small business lending. It would help small business owners to get private capital to finance expansion and hire new workers," said Senate Finance Committee Chairman Max Baucus, a Democrat. "And all these things would help small businesses to create as many as a half a million jobs."
The measure had been delayed for months and was successfully filibustered by Republicans in July. But on Tuesday, Democrats cracked the filibuster with the help of two Republicans, Sens. George Voinovich and George LeMieux. That set the stage for Thursday's vote.
After Senate passage, the bill returns to the House, where its leader, Speaker Nancy Pelosi, said the chamber will take the bill up next week to send it to the White House for Obama's signature.
The bill is advancing too late to help lower a 9.6 percent nationwide unemployment rate before Election Day. It follows successful efforts this year to provide a temporary payroll tax holiday to companies that hire the jobless, and to extend assistance to the unemployed, cash-starved state governments and local school districts.
