President Obama has been pushing for changes to the Internal Revenue Service Code that would limit the tax benefits of pass-through entities. Most small businesses are limited liability companies or S corporations and the profits and losses pass-through to the individual members or shareholders. These are merely preliminary proposals and most likely the House of Representatives will not let these proposals be pushed through Congress.
There is been a lot of recent talk about the lack of small business loans and it has been pointed out that the Small Business Administration is a good source for guaranteed business loans for the smallest of businesses. That is simply not true! Since 2005, the average size of the Small Business Administration loan under its loan guarantee program has gone from approximately $160,000 to approximately $342,000. In 2005, the government backed loans totaled almost 96,000. Last year, only 44,000 loans were guaranteed. Also, the smaller banks, that are many times the best choice for small business, seem to be getting out of the SBA loan guarantee programs in practice. Three large banks, including Wells Fargo, control over 20% of the market for SBA guaranteed loans.
The result is the bigger banks are making a larger percentage of loans in larger dollar amounts, but to less than half the number of businesses that they did in 2005. Read more