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Entrepreneurs Not Feeling Stimulated

By Dennis Romero

Opinions expressed by Entrepreneur contributors are their own.

The $787 billion economic stimulus package signed into law by President Barack Obama this week contains $116 billion in tax cuts for individuals, more than $53 billion for education and job training, and north of $10 billion for health, science and research.

But there's nary a penny explicitly set aside for startups and entrepreneurs. In fact, the closest you'll come to finding any such stimulus is the package's extension of an existing small-business deduction that allows owners to write off $250,000--double the amount set in 2007--worth of office equipment, manufacturing gear and vehicles.

To advocates who say American small businesses employ and create themajority of job positions nationwide, the stimulus is more of adrag--and is possibly even short-sighted.

During his campaign last year, Obama acknowledged the economic power ofentrepreneurs, promised to boost small business owners, and proposed to seed new business incubatorswith $250 million in federal funds. "Small businesses employ half ofthe workers in the private sector in this country and account for themajority of the job growth," he acknowledged at a campaign stop in October.

At the time Obama had just released his "Small Business Emergency Rescue Plan" (PDF) andcalled for the U.S. Small Business Administration to administer moreloans through its disaster lending program. But so far, he hasn'twalked the walk, observers say.

Bill Rys, tax counsel for the National Federation of Independent Business,says even the stimulus bill's main lifeline to entrepreneurs--itsSection 179 business gear deductions--could be of limited value at atime when owners are cutting their equipment expenses. "We're seeingthose types of investments really slowing down," he says.

"We certainly would have liked to have seen more provisions directlytargeted to small business, especially mom-and-pop operations," hesays. "There's little in the bill that speaks directly to them."

Job creation is a key to economic recovery, and there's little in thepackage that will inspire the nation's biggest employmentsector--smaller businesses--to hire, argues American Small Business Leaguepresident Lloyd Chapman. "A stimulus bill with no provision forcompanies that create most new jobs," he says. "That's a problem."

The bill does put billions of dollars into repairing and upgradinginfrastructure such as roads and bridges, and related projects willlikely trickle down to some smaller contractors. And its tax provisionswill give individuals, including most average entrepreneurs, more than $100billion in total breaks. But Chapman maintains that the stimulus is"insignificant" when it comes to small business.

"Most Americans work for small businesses," he says. "We must protect this great resource."

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