Arkansas News Bureau

LITTLE ROCK — U.S. Sen. Mark Pryor, D-Ark., said today a new bill he has introduced would help entrepreneurs start new small businesses by allowing them to open tax-free savings accounts.

The bill, known as the Small Business Start-Up Savings Accounts Act, would allow entrepreneurs to save up to $10,000 per year and grow those savings tax-free for the purpose of starting up a small business. Once an individual decides to start a small business, funds in the account could be used for equipment, facilities, marketing, legal fees and other capital and operating expenses.

Funds not used for start-up expenses or withdrawn for other purposes would lose their tax-preferred status.

Pryor said personal financing is becoming increasingly important to start a business, especially in light of the current credit crunch and economic downturn. Instead of savings, would-be-business owners are turning to retirement savings and credit cards to produce enough start-up capital, he said.

“Small businesses are a key to our nation’s economic recovery, and we must create an environment that fosters their stability and growth,” Pryor said.