Government Incentive for Foodservice Equipment Purchases
The Small Business Jobs and Credit Act of 2010, signed by President Obama on Sept. 27, provides the nation’s foodservice operations and small businesses with tax relief and assistance in gaining access to capital.
The legislation gives foodservice operations an additional incentive to purchase equipment within the next 13 months. As a result of the legislation, foodservice operations can write off up to $500,000 of equipment costs immediately, rather than recovering all the cost over a multi-year depreciation schedule, as long as the purchase is completed during the 2010 or 2011 tax year.
This is a significant, but short-term opportunity to expense new equipment in the year it is purchased. We encourage you to review your capital improvement plan in order to take advantage of the greater access to credit and capital expenditures tax incentives through the end of 2011.
Benefits of the legislation are not limited to tax incentives on equipment purchases. The legislation also extends Section 179 expensing limits to foodservice operation structural improvements, new construction, and leasehold and retail improvements. As part of the $500,000 limit, foodservice operations can expense $250,000 of those costs the year incurred, through 2011. Prior to the legislation, foodservice operations could recover these costs only through a 39½-year depreciation schedule.
Benefits to foodservice operations don’t end there. Additional incentives make it easier for foodservice operations to obtain Small Business Administration-backed loans to invest in their businesses. The Small Business Jobs and Credit Act of 2010 includes the following financial incentives:
• Establishment of a $30 billion Small Business Lending Fund to spur and facilitate small banks in lending money to small businesses
• Increase in the size of Small Business Administration loans from $2 million to $5 million
• Continue through year end the elimination of fees associated with such loans
• Continue through year end a 90 percent federal guarantee on such loans
For more information on what benefits the Small Business Jobs and Credit Act of 2010 provides for foodservice operations, visit http://www.restaurant.org/nra_news_blog/2010/09/restaurant-industry-wins-tax-incentives-in-small-business-bill.cfm.
For additional information on the Small Business Jobs and Credit Act of 2010, visit http://www.whitehouse.gov/blog/2010/09/27/president-obama-signs-small-business-jobs-act-learn-whats-it.