Editor's Letter - A Capital Plan?

Readers of Storage & Destruction Business are certainly aware that recovered paper prices dropped dramatically in the last quarter of 2008 and remain well below the figures seen earlier that year. Information destruction firms are confronted with this reality daily as they attempt to sell their recovered fiber to brokers, recyclers or consuming mills. The tightness in the credit market may be a reality that is less apparent to many firms that are not in the process of adding capital equipment or otherwise seeking to expand.

For entrepreneurs who are looking to grow in this challenging environment, the Small Business Administration (SBA) says the American Recovery and Reinvestment Act (ARRA) of 2009 will help to "unlock credit markets and begin economic recovery for the nation’s small business sector." The ARRA also offers assistance to companies buying capital equipment.

SBA Acting Administrator Darryl K. Hairston says, "The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch and will provide financing opportunities to help them create new jobs in their communities."

According to the SBA (www.sba.gov), the ARRA provides $730 million to the agency, enabling its lending and investment programs to reach more small business owners. The funding includes $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares; $255 million for a new loan program to help small businesses meet existing debt payments; and $30 million for expanding SBA’s Microloan program. The ARRA also authorizes refinancing for certain SBA loans.

In addition to these changes, the ARRA also extends the depreciation bonus that was introduced in the 2008 Economic Stimulus Act. As a result, companies purchasing some types of new equipment in 2009 will be able to take a 50 percent depreciation for the first year in addition to the traditional 20 percent depreciation they can deduct using a five-year depreciation schedule.

The ARRA also has amended Section 179 of the IRS code, extending for one year the increased expensing limit of $250,000, as long as the qualified equipment does not exceed $800,000. This depreciation allowance can be applied to new and used equipment and is designed to target small businesses.

More details on the 2009 bonus depreciation established by the ARRA is available at www.depreciationbonus.org, a Web site set up by Associated Equipment Distributors and the National Utility Contractors Association.

In an economic and business environment that appears to offer little aside from dire reports about bank bailouts and tight credit markets, these programs are likely welcome news to many entrepreneurs.