Despite all the talk about the 20% tax on unrealized capital gains, dubbed the “Billionaires Minimum Income Tax“, some lesser-known but eminently useful things might actually be waiting for entrepreneurs in President Joe Biden’s $5.8 trillion 2023 budget proposal, unveiled this week.
Primarily, Biden’s request would allocate about $914 million to the Small Business Administration, the agency responsible for providing access to capital and other resources for small businesses nationwide. By comparison, the budget request for the SBA was $852.5 million in FY22 and $819 million in FY21.
At the height of the pandemic, the agency helped channel more than $1.1 trillion helping American small businesses through a variety of programs, including the Paycheck Protection Program, a $750 billion forgivable loan program, and the Restaurant Revitalization Fund, a business grant program of restoration. In fiscal year 21, the SBA lending authority reached $44.8 billion across its traditional lending programs.
The Biden administration has already made known some of its plans for these funds. Last November, the White House pledged to help disadvantaged small businesses secure more federal contracts by increasing its 2022 federal contract target from 5% to 11%. With Biden’s backing, the SBA has also made strides in concocting whatever Covid-related relief it can, most recently extending the deferment period for its disaster loan program and expanding its pilot program further. community.
And if the federal budget passes in its current form, more help for entrepreneurs is on the way. Here are five areas small businesses should watch for in the current budget proposal:
1. Fight against climate change:
The budget allocates $10 million to help small businesses join the fight against climate change. The money is intended to boost access to capital for investments that would help small businesses go green, which is a priority for regulators like the Securities and Exchange Commission. The SEC recently proposed a rule requiring public companies to disclose their greenhouse gas emissions, and investors are increasingly focusing on environmental, social and governance (ESG) factors.
2. Help veterans get certified:
The budget provides $20 million for a certification program to help veteran-owned small businesses access more opportunities across government. Achieving this certification status can open up more business opportunities, for example through government contracts.
3. Help underserved entrepreneurs:
The budget aims to set aside an additional $31 million to help underserved entrepreneurs, which includes improving access to mentors, training and consulting services. The SBA received $272 million in FY22 appropriations for its entrepreneurial development programs.
4. Amplification of national manufacturing:
To bolster domestic manufacturing, the budget would provide $30 million to invest in growth accelerators, regional innovation hubs and the federal-state technology partnership program. The FAST program helps organizations facilitate state and regional programs aimed at increasing proposals and awards in research, development and innovation. An additional $4 million is earmarked to create a manufacturing center so that the SBA has more power to connect small businesses to key manufacturing resources and enter new markets.
5. Broaden access to capital:
Access to affordable capital continues to be a challenge for many entrepreneurs, which is why the budget proposes to increase the lending power of a handful of programs by $9.5 billion. These programs include the agency’s 7(a) loan guarantee program, an attractive vehicle for lenders given that the SBA guarantees up to 85% of the loan amount. Further extensions apply to the 504 loan program, which offers long-term, fixed-rate loans of up to $5 million for the purchase of real estate, among other things. The expansion also increases lending levels to small investment companies, which are SBA-licensed private companies that invest in small businesses, and the Secondary Market Guarantee Program, a secondary market for loans backed by the SBA.