SBIA urges Congress to preserve EBITDA standard

SBIA is part of a joint effort to preserve the current standard for businesses’ interest expense deductions.

WASHINGTON, DC (September 27, 2021) – The Small Business Investor Alliance (SBIA), the association for private equity funds investing in American small businesses, is part of a joint effort to preserve the current standard for businesses’ interest expense deductions, which will expire at the end of 2021. The stricter standard that takes effect in 2022 will make it more expensive for capital-intensive companies to finance critical purchases and grow their businesses. Currently, interest deductions are limited to 30% of earnings before interest, tax, depreciation, and amortization (EBITDA) under tax code section 163(j). Starting in 2022, the limit will be 30% of earnings before interest and tax (EBIT). By excluding depreciation and amortization, the stricter EBIT standard will increase taxes on businesses and make financing equipment purchases more expensive.

In addition, SBIA is pleased to express strong support for bipartisan legislation introduced in the House by U.S. Reps. Joseph Morelle (D-NY) and Adrian Smith (R-NE) to protect the EBITDA standard for business interest deductions. The “Permanently Preserving America’s Investment in Manufacturing Act” would prevent the scheduled EBIT change from taking effect and set a permanent EBITDA standard for interest deductibility. SBIA joined 80+ trade associations in signing the Coalition for America’s Interest letter supporting the bill and calling on Congress to preserve the EBITDA standard.

Small business investors want to work with the Administration and Congress on a bipartisan basis to promote policies that support robust domestic investment and help create American jobs. The average American business would be negatively impacted by a 3x increase in their incremental tax obligations if current deductions for depreciation and amortization are not preserved.

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 About the Small Business Investor Alliance (SBIA)

The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for over 60 years. For more information, visit www.SBIA.org or call (202) 628-5055.

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