Franchisees Gain New Financial Benefits Under the Small Business Act
by Ed Teixeira
The Small Business Jobs and Credit Act which was just signed by President
Obama provides benefits for franchisees and particularly those franchisees in
the restaurant sector. Here is a short summary of the benefits.
The recently enacted Small Business Act provides an incentive for franchisees
to make capital improvements to their location. This especially favors
franchisees in the restaurant sector. The new bill allows small businesses to
deduct the full cost of equipment purchased outright or financed during the 2010
and 2011 tax years in an amount up to $500,000. In addition, the bill provides
incentives for community banks to lend to small businesses.
The Small Business Act, by helping businesses reduce their taxable income,
enables them to use the savings for other parts of the businesses, such as
adding new employees.
Up to $250,000 of the $500,000 invested can be deducted for structural, new
construction, and leasehold improvements. The Small Business Act also allows
businesses to claim a bonus depreciation whereby they can immediately deduct 50%
of the remaining cost of new equipment through 2011. The Act altered Section 179
of the Tax Code which set expensing limits. This means more businesses qualify
for the tax break than before.
In total, the bill includes $12 billion in tax cuts for small businesses and
a new $30 billion lending fund to give banks more incentives to lend to smaller
© 2010 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at