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Small-business measure faces test in Senate

WASHINGTON (Reuters) – Democrats in the Senate are mounting a final push to help small businesses and boost employment on Tuesday, less than two months before they face voters who believe they have not done enough to boost the struggling economy.

In a series of votes starting around 11 a.m. EDT, Senate Democrats hope to muster the 60 votes they need to overcome a Republican procedural hurdle and move toward a final vote. Democrats picked up crucial support last week when Republican Senator George Voinovich said he would break with his party and back the bill.

The House of Representatives has backed a version of the bill previously.

The bill, which includes $12 billion in tax breaks and a $30 billion lending fund, represents one of the Democrats' final chances before the November 2 elections to show voters they are working to improve the economy.

If the bill clears Congress, it would be a rare victory on the job-creation front for Democrats who have seen many of their other efforts blocked by Republicans this year.

Democrats estimate the measure could create 500,000 new jobs. Some 8 million jobs have been lost since the worst recession in 70 years began in late 2007.

Republicans have called the proposal a junior version of the government's controversial bailout of Wall Street.

With the unemployment rate stuck at 9.6 percent, Republicans are poised to rack up big gains in the November elections, possibly winning control of the House and the Senate, due in part to public perceptions that Democrats have not done enough to create jobs.

The bill would create a $30 billion fund that the government would invest in independent community banks to encourage lending to small firms. It would also exclude all capital gains on sale of small business stock from taxes. and ease tax rules for expensing and depreciation of equipment.

Industry groups back the bill.

Smaller firms have complained that they have had trouble getting loans to expand following the 2007-2009 financial crisis, when many banks pulled back their lending activity.

"Small businesses are the engine that drive our economy and they need help," Democratic Leader Harry Reid said in remarks on the Senate floor.

The U.S. government's definition of what constitutes a "small business" varies by sector, but typically encompasses firms that employ fewer than 500 workers or take in less than $7 million in annual revenues.

Republicans hope to modify the bill to ease tax-reporting requirements included in the landmark healthcare-reform bill passed earlier this year, but Democrats are expected to oppose that proposal.

(Editing by Leslie Adler)