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    Document Summary
    - Report Published -

    Report Document No. 22

    Document Title
    2011 Annual Executive Summary of the Small Business Commission

    Small Business Commission

    Enabling Authority
    30-183 (4.)

    Executive Summary

    The Small Business Commission was created pursuant to Chapter 22 ( 30-182 et seq.) of Title 30 of the Code of Virginia for the purposes of studying, reporting, and making recommendations on issues of concern to small businesses in the Commonwealth. The powers and duties of the Commission include:

    • Evaluating the impact of existing statutes and proposed legislation on small businesses;

    • Assessing the Commonwealth's small business assistance programs and examining ways to enhance their effectiveness; and

    • Providing small business owners and advocates with a forum to address their concerns.

    The co-chairs of the Commission were Senator W. Roscoe Reynolds and Delegate G. Glenn Oder. The other legislative members of the Commission were Delegate R. Lee Ware, Jr., Delegate John A. Cox, Delegate William R. Janis, Delegate Clarence E. Phillips, Delegate Algie T. Howell, Jr., Senator Frank M. Ruff, Jr., Senator R. Creigh Deeds, and Senator George L. Barker. The gubernatorial appointees at the start of the interim were Robert A. Archer, Lana McG. Ingram, Marilyn H. West, and Carlos Del Toro. During the interim, Mr. Archer was reappointed and the other citizen members were replaced by John E. Gordon, Robert G. Marcus, and Nicole Riley

    2011-2012 Interim Activities.

    The Small Business Commission met once during the 2011-2012 interim, on May 19, 2011, in Richmond. The Commission re-elected Senator Roscoe Reynolds and Delegate Glenn Oder as co-chairmen of the Commission, notwithstanding the directive of subsection C of Virginia Code 30-182 that the Commission elect a chairman and vice-chairman.

    Presentations at the meeting included:

    • A proposal by Dr. Samuel D. Bornstein, professor at the Kean University School of Business and a member of the firm of Bornstein & Song CPAs, to allow a net interest deduction (NID) for a mortgage lender on loans made to businesses in enterprise zones. He also recommended modifying the NID concept to address the small business owner’s use of the home equity to access capital for the business, and calls it a refined net interest deduction (RNID). Under his proposal, a lender would be required to pass along the tax savings achieved as a result of the tax-free treatment of the interest income earned from residential mortgage loans, where the mortgagor used all or part of the loan proceeds to invest in the small business located within an enterprise zone. Under this proposal, the lender serves as a conduit through which tax savings flow from the state to small businesses to lower the monthly mortgage payment. The lender would be required to modify the residential mortgage loan from which the interest income is derived by an interest rate reduction, term extension, principal reduction, or principal forbearance. Several members expressed skepticism about Dr. Bornstein's proposal.

    • The Virginia Qualified Small Business Incentive (VQSBI), which was offered by Barry DuVal of the Virginia Chamber of Commerce and Fred Russell of Virginia Capital Partners. The Incentive, modeled on the federal qualified small business stock capital gain exclusion, would allow angel investor to exclude gains realized from the sale of a small business investment from taxable income, provided the investor holds the investment for at least five years. The VQSBI tax incentive would allow angel investors to allocate capital to opportunities that they believe will be successful. The VQSBI tax incentive could be limited to no more than $500,000 of investment per individual per company.

    • A presentation on House Bill 2522 (2011 Session),which would have removed from the statutorily authorized form of the notice of a buyer's right to cancel a home solicitation sale a provision that allows notice of cancellation to be sent by telegram.

    • An overview of legislation of particular interest to the Commonwealth's small businesses that passed during the 2011 General Assembly Session.

    • Public comment, during which Nicole Riley of the Virginia Chapter of the National Federation of Independent Business mentioned that the Budget Bill included provisions phasing out the accelerated sales tax collection provision and eliminating regulatory fee increases. She also alerted the Commission to issues relating to the implementation of the federal health care reform legislation and to proposed legislation that would have incentivized insurance companies to fund Small Business Investment Companies.

    The Commission cancelled a joint meeting with the Small Business Advisory Board that had been scheduled for August 2011 after co-chair Delegate Oder resigned from the General Assembly.

    A summary of the Commission's meeting may be found on the Commission's website: http://dls.virginia.gov/commissions/sbc.htm?x=sbc. The Commission does not intend to submit a further report for publication.