- Associated Press - Thursday, September 16, 2010

The 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 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.

Mr. Obama said Thursday that the bill will help millions of small-business owners across the country grow and hire. “These tax breaks and loans are going to help create jobs in the short term,” he said.

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, Montana 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 V. Voinovich of Ohio and George LeMieux of Florida. That set the stage for Thursday’s vote.

After Senate passage, the bill would return the measure to the House, where Speaker Nancy Pelosi said the chamber will take the bill up next week to send it to the White House for Mr. 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.

Democrats had hoped to pass the bill in July but couldn’t win any GOP converts. They fell just short of defeating a filibuster that was called because Democrats blocked Republicans from offering unrelated amendments.

“There are many good things in this bill, but I believe it could have been better,” said Sen. Charles E. Grassley, Iowa Republican. “Unfortunately, the Democratic leadership has been more interested in scoring political points than actually providing relief to small business.”

Mr. Grassley wanted the measure to have additional tax cuts, including a 20 percent tax deduction off their earnings.

The small business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Long-term investors in some small businesses would be exempt from paying capital gains taxes.

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