The government gets a lot of flack from businesses for not being ‘pro-business’, especially in election cycles. In reality, the government does a lot to help support large and small businesses alike. Here are some of the ways the government gets involved that should be included in the conversation with business owners when discussing the financial health of their business.
Tax breaks and incentives
One of the most common ways the government assists the business world is by providing tax incentives and breaks for businesses that meet certain criteria, both on a federal and state level.
For example, Arizona’s Commerce Authority demonstrates 13 ways businesses can receive tax relief. This includes tax credits for quality job creation, sales tax exemptions on manufacturing equipment, and tax credits for hiring individuals from targeted groups. All of these are ways companies can reduce their overhead costs.
Some programs give tax breaks for companies that use renewable energy. Others focus on giving relief after natural disasters. Then there is the common deduction for charitable donations that a lot of companies use.
Subsidies, grants, and loans
In addition to tax breaks and incentives, the government hands out subsidies in the form of cash grants, like the ones given to farmers for decades to help control the supply and demand of essential crops – especially, but not limited to, corn. Common industries the government subsidizes are oil, agriculture, housing, automobiles, and health care.
The government can also help businesses that have trouble qualifying for bank loans by guaranteeing a portion of the loan to the lender, increasing the likelihood one is awarded. The government has ten loan programs primarily aimed at small businesses.
In order for the government to complete major public works or other building projects, it often employs private-sector businesses as contractors. All contracts are awarded through an open bidding process where any business can search for opportunities and propose their services.
To ensure fairness, the contracting program sets aside a portion of contracts for small businesses as well as for certain socio-economic categories. This includes businesses owned by women and veterans, as well as those in historically underutilized business zones (HUBZones).