NEW YORK (CNNMoney.com) -- Lawmakers return to Capitol Hill this week after the summer recess and small business tops their to-do list.
Their goal: Help small business, and boost the economy. The Senate will consider two proposals right off the bat.
The broader measure is the Small Business Jobs Act, which includes a $30 billion fund to spur lending and $12 billion worth of tax breaks. The Senate will also decide whether to repeal a law enacted as part of health care reform that will require small businesses to file millions of new tax forms -- a provision a top Republican calls "job killing."
Main Street needs the help: Credit remains hard to come by, and without it hiring is suffering. In fact, small business hiring has been on a downward slide for the past two and a half years.
And both the number of small business loans and the total value of those loans have declined, according to data from the FDIC. The number of loans has dropped by 17.8% since the second quarter of 2008 and the total value of those loans plunged by $60 billion to $650 billion.
Large firms can get access to credit by selling stock and corporate bonds, but most Main Street businesses don't have such an option.
"Small businesses, which are more dependent on bank lending to meet their financing needs, are still experiencing problems accessing credit due to the continued tight lending standards and banks and have been unable to increase hiring," the congressional Joint Economic Committee wrote in a report released Monday.
With the unemployment rate still flirting with double digits, pressure is mounting on Washington to create jobs.
$42 billion lending bill: President Obama started pushing for ways to get cheap capital to small businesses nearly a year ago.
The Small Business Jobs Act authorizes the creation of a $30 billion fund run by the Treasury Department that would deliver ultra-cheap capital to banks with less than $10 billion in assets.
The idea is that community banks do the lion's share of lending to small businesses, and pumping capital into them will get money in the hands of Main Street businesses.
The bill would also provide $12 billion worth of tax relief for small businesses between 2010 and 2020, according to a preliminary estimate from the Joint Committee on Taxation.
In addition, it would increase Small Business Administration loan limits and extend loan sweeteners through the end of the year. It offers a slew of tax cuts to both encourage investment and entrepreneurship. And the legislation provides $1.5 billion in grants to state lending programs that can't turn to empty state coffers for more cash.
Tax form mayhem: But first, on Tuesday, the Senate will take up bills to repeal or amend the health care law's expansion of tax reporting requirements.
A small section of the massive health care law mandates that beginning in 2012, all companies will have to issue a 1099 tax form not only to contracted workers, as they must already do, but also to any individual or corporation from which they buy more than $600 in goods or services in a year.
The IRS Form 1099 is used to document income for individual workers other than wages and salaries: Freelancers get them and businesses send them out. Under the new law, the 1099 form would be used to track payments for services and tangible goods. Also, it requires that 1099s be issued not just to individuals, but to corporations as well.
The result would be millions of additional tax forms.
The federal government loses more than $300 billion each year in tax revenue on income that goes unreported, according to the IRS. The 1099 provision aims to capture more of that tax revenue, while offsetting the cost of the health care law.
While major corporations have entire departments of staffers and computers to deal with tax requirements, most Main Street business owners wear the tax preparer hat themselves, or have to pay a tax preparer to do it for them.
"We have a Nebraska business who says it is going to cost him $23,000 a year in CPA fees just to file all this crap," said Steve Wymer, the communications director for Sen. Mike Johanns, a Nebraska Republican who has proposed an measure to repeal the requirement entirely.
House Minority Leader John Boehner called the 1099 tax requirement "job killing" in a speech last month. "Talk about overhead."
The U.S. Chamber of Commerce sent a letter to members of Congress on Monday with 2,434 signatures from businesses and associations calling for repeal.
Meanwhile, Sen. Bill Nelson, a Florida Democrat, has countered with a more moderate proposal: All businesses with fewer than 25 employees would be exempt from filing the additional tax forms for the payment of goods. For all other businesses, the reporting threshold would be raised to $5,000. Credit card transactions would be exempt altogether.
The Senate is set to first take up Johanns' measure and then move to Nelson's version on Tuesday. It's unlikely either will get the required 60 votes, but the issue is expected to debated and lobbied in coming days.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.92%||3.97%|
|15 yr fixed||3.00%||3.08%|
|30 yr refi||3.99%||4.02%|
|15 yr refi||3.10%||3.16%|
Today's featured rates:
Berkshire Hathaway CEO Warren Buffett released his 50th annual letter to shareholders. The Oracle of Omaha thinks the next 50 years will be great and knows who will replace him. More
Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More
With the death of Leonard Nimoy, the actor who played Star Trek's Spock, we remember his character's legacy: The technology we use every day. More
A social media frenzy about the color of a dress is bringing fame and fortune for one small British fashion company. More