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Carney and Small Business Administration seek to connect small business to tax incentives

Delaware First Media, Written By: Tom Byrne, April 4, 2011

Delaware Congressman John Carney (D-Delaware) – like many others in the political and business arenas – sees small business as the linchpin to Delaware and the country’s economic recovery.

“Small business is the engine for job growth in our economy.  Seventy percent of new jobs are created by small businesses and these are jobs that aren’t likely to be outsourced,” said Rep. Carney. “They are jobs created in the U.S and likely to stay in the U.S.”

But many small businesses are struggling just to make ends meet, much less grow and expand (see related story).  That’s why Carney visited Newark-based ANP Technologies Monday with representatives of the Small Business Administration, attempting to draw public attention to tax incentives and other resources available to small business owners. ANP specializes in technology development for the pharmaceutical, biotechnology and defense industries.

“Tax incentives [and other incentives] at this particular time can help small businesses get over the hump,” said Carney.
The tax credits and incentives Carney emphasized included the two percent payroll and self-employment tax holiday available in 2011, and a tax credit of up to 35 percent of a small business employer’s healthcare costs on employee premiums. Carney also highlighted the two year extension on the research and development tax credit for science and tech-based small businesses and suggested it be extended indefinitely.

“Each year we creep up on [letting it expire] and we extend it for a year or two,” said Carney. “When you think abut it, research and development—innovation—are the seeds for businesses [growing] long into the future.”

Dr. Ray Yin, founder and chief technology officer for ANP Technologies, admits his company was not aware of the R&D tax credit and is now looking to take advantage of it, which could lead to more hiring. ANP currently employs about 34 full-time and 15 part-time employees and was recently one of 44 small businesses nationally to win the U.S. Small Business Administration’s Tibbets Award recognizing excellent work with the Small Business Administration’s Small Business Innovation Research (SBIR) program.

“Our resources are so limited that we can only focus on our main [goal], technology and product development,” said Dr. Yin. “The tax code is so complicated for us to understand and there are things we have missed.”

Jayne Armstrong, Delaware District Director for the Small Business Administration, says Yin’s delay in taking advantage of the R&D credit is indicative of a greater problem: making businesses aware of the incentives, and seeing if they are eligible for them.

“There’s so much that has hit the street in the past year with small businesses,” said Armstrong. “It’s difficult for small businesses that are trying to maintain their operations to stay on top of all the changes.”

Carney concurs.

“Unlike large businesses which have employees and whole departments dedicated to knowing what the tax laws are, small business people are just out there trying to keep their business operating,” noted Carney. “They often don’t have the personnel or time to designate to [learning about these credits].”

Armstrong says SBA has made a real push in last six months to connect small businesses to these incentives. She adds that SBA is also trying to address the difficulty many small businesses have accessing capital through loans. Among the the SBA’s new initiatives are the Small Loan Advantage and Community Advantage loan programs that assist businesses looking for loans under $250,000.

“A lot of small businesses that are starting out and need startup capital or smaller loans are having a very difficult time finding financing. And until our banks come back and start lending again at previous levels to the small business community, it’s going to be a major issue. It is definitely hurting the startup, small business market because they have nowhere to turn right now,” said Armstrong.

Carney is optimistic banks will start making more capital available, but concedes it may take some time.

“The fact of the matter is a lot of the financial institutions locally and across the country have struggled. Some have gone out of business. Others locally have struggled to stay in business. As they get recapitalized and get their foundations firmed up, they will be able to do that lending,” said Carney. “In the meantime, we need to do everything we can to make sure small business has access to capital.”

Carney admits it is not an easy process.

“One of the things that’s been reinforced for me in the first couple of months as Congressman is how the individual needs of small businesses differ, and how difficult that makes it for government to address those needs,” said Carney.