Assemblyman Ruben J. Ramos, Jr. applauded yesterday’s signing of the $30 billion federal small business lending bill by President Obama, noting the broader implications it will have for New Jersey businesses, particularly those in Urban Enterprise Zones, which could benefit doubly if the legislature approves a bill recently introduced by Ramos.
“This federal legislation will provide a tremendous boost to small business loan volume, hopefully giving banks more incentive to lend to businesses in our Urban Enterprise Zones and throughout New Jersey,” said Ramos (D-Hudson). “I’d like to thank Senators Frank Lautenberg and Bob Menendez and Congressman Albio Sires for their support of this important legislation.”
“This stimulus measure ties in nicely with the legislation I recently introduced to provide tax-free treatment on the interest banks earn on loans to small businesses in Urban Enterprise Zones. Together, these measures will provide a double incentive for banks to begin freeing up credit to businesses who have been hit hard by the recession,” added Ramos.
Ramos introduced the legislation (A-3243) last week to help combat the “credit crunch” by creating an incentive for lenders to provide loans to businesses within the state’s Urban Enterprise Zones (UEZ). The bill would permit lenders making loans directly to qualified UEZ businesses to receive tax-free treatment on the interest earned on those loans for five years.
“Stimulating the flow of credit is the key to reigniting our economy and sparking job growth. If businesses can expand, they can hire and we can begin getting people off the unemployment rolls and back to work,” added Ramos.
Specifically, the bill permits lenders who are subject to the corporation business tax to deduct from their entire net income the amount of net interest received on loan repayments from a qualified UEZ business that is engaged in the active conduct of trade or business within a UEZ. Additionally, the lenders would be permitted to deduct from their gross income an amount equal to the amount of net interest received the loan repayment. In order to qualify for the tax deduction, the qualified UEZ business must be located solely within a UEZ; the loan must be solely in connection with activity within the UEZ; and the taxpayer claiming the deduction must not have any equity or other ownership interest in the debtor.