A new bill, the Access Business Credit (ABC) Act, introduced by Rep. Andy Kim, D-N.J., would encourage banks to make small-business loans more affordable amid rising interest rates.
The ABC Act would allow community banks to exclude qualified interest on small-business loans from their gross income.
The bill "would allow banks not to pay taxes on the interest income they receive from these smaller loans," Jeff Bush of The Washington Update told ThinkAdvisor Tuesday in an email. "Theoretically, banks could pass along those savings in the form of a lower interest rate to the borrower."
Under the bill, eligible banks can deduct two types of interest, if neither type exceeds $5 million:
- Interest incurred in the ordinary course of business of a small business
- Interest secured by land used or held by a small business in conjunction with farming operations
Qualified lenders could have no more than $50 billion in total assets.
