How the One Big Beautiful Bill Act Changes Business Loans and Capital Investment in 2026
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is the most significant business tax overhaul since the Tax Cuts and Jobs Act of 2017. If you own a small business and you’ve been sitting on a capital investment decision — new equipment, an expansion, a fleet upgrade — the math just changed dramatically in your favor.
This isn’t a minor tweak. The OBBBA permanently restores 100% bonus depreciation, doubles the Section 179 expensing cap to $2.5 million, brings back immediate R&D expensing, and introduces brand-new deductions for tips, overtime pay, and car loan interest. For business owners considering financing in 2026, this law fundamentally reshapes the cost-benefit equation of borrowing to invest.
Here’s what every business owner needs to understand — and how to position yourself to take full advantage.
100% Bonus Depreciation Is Back — And It’s Permanent
Under previous law, bonus depreciation was phasing down year by year — from 100% in 2022 to 80% in 2023, 60% in 2024, and headed to zero. The OBBBA reversed that entirely.
Section 168(k) now permanently allows 100% first-year depreciation for qualifying business property acquired and placed in service after January 19, 2025. The IRS confirmed this in Notice 2026-11, which provides interim guidance until final regulations are issued.
What this means in plain terms: if you buy a $500,000 piece of equipment in 2026, you write off the entire $500,000 in year one. No spreading it across 5 or 7 years. The full deduction hits your taxes immediately.
This applies to:
- Equipment and machinery (trucks, excavators, restaurant equipment, medical devices)
- Certain plants and agricultural property
- Qualifying used property (not just new purchases)
- Long-production-period property (the prior 2028 deadline has been eliminated)
For business owners financing equipment through SBA 7(a) loans or equipment financing, this is transformative. You borrow to buy the equipment, but the tax deduction can offset a significant portion of the cost in year one — effectively reducing your real out-of-pocket expense.
Section 179 Doubled to $2.5 Million
The OBBBA also doubled the Section 179 small business expensing cap from $1.25 million to $2.5 million, with the phase-out threshold rising to $4 million. The deduction fully phases out once total qualifying purchases reach $6.5 million.
Here’s how Section 179 and bonus depreciation work together as a capital stack:
- Use Section 179 first — deduct up to $2.5 million of qualifying equipment, software, and property improvements (roofs, HVAC, security systems, and more)
- Then bonus depreciation kicks in — for any remaining qualifying costs above the Section 179 limit, 100% bonus depreciation applies with no dollar cap
- Key difference: Section 179 cannot create a net operating loss, but bonus depreciation can — so businesses with high capital expenditures can strategically use both
For a construction firm buying $3 million in equipment, here’s the math: deduct $2.5 million under Section 179, then take 100% bonus depreciation on the remaining $500,000. That’s a full $3 million write-off in year one.
This is indexed for inflation starting in 2025, so the limits will continue to climb each year.
R&D Expensing Restored — And Small Businesses Can File for Refunds
One of the most painful provisions of the 2017 TCJA was the requirement to amortize domestic R&D costs over 5 years instead of expensing them immediately. The OBBBA reverses this by creating Section 174A, which permanently restores immediate expensing for domestic research and experimental expenditures.
This is effective for tax years beginning after December 31, 2024 — meaning it applies to your 2025 and 2026 tax filings.
The retroactive opportunity is even bigger: Small businesses with average annual gross receipts of $31 million or less can elect to retroactively apply this change all the way back to tax years beginning after December 31, 2021. That means you can file amended returns for 2022, 2023, and 2024 to recover R&D costs you were forced to capitalize. Depending on your R&D spend, this could be a five- or six-figure refund sitting on the table right now.
If your business invests in product development, process improvements, software, or any qualifying research activity, talk to your tax advisor about filing those amendments before the window closes.
New Personal Tax Deductions That Affect Business Owners
The OBBBA introduced several new personal deductions that directly impact small business owners and their employees:
- No Tax on Tips: Workers in tipped occupations can deduct up to $25,000 in cash tips from their taxable income. This phases out at $150,000 AGI (individual) or $300,000 (joint). For restaurant and hospitality business owners, this makes your positions more attractive to workers.
- Overtime Premium Pay Deduction: The premium portion of overtime pay (typically the “half” in time-and-a-half) is now deductible up to $12,500 ($25,000 for joint filers). This only applies to overtime under the Fair Labor Standards Act, not state-specific rules or union contracts.
- Car Loan Interest Deduction: Up to $10,000 in interest on personal passenger vehicle loans is now deductible, with phase-outs starting at $100,000 AGI. This is especially relevant for business owners who use personal vehicles.
- Senior Standard Deduction Boost: An extra $6,000 is added to the standard deduction for seniors, available for tax years 2025 through 2028.
These deductions are temporary (2025–2028), so planning around them now is critical.
1099 Reporting Threshold Changes — What Business Owners Need to Know
The OBBBA made significant changes to tax reporting thresholds that affect how you report payments and how payments are reported to you:
- 1099-NEC and 1099-MISC: The reporting threshold increases from $600 to $2,000 for payments made in tax year 2026 (filed in 2027). This is indexed for inflation starting in 2027.
- 1099-K (Payment Platforms): The threshold has been reverted to $20,000 and 200 transactions, retroactive to 2022. This reverses the American Rescue Plan Act’s attempt to drop it to $600. If you sell through PayPal, Venmo, Square, Stripe, or similar platforms, you won’t receive a 1099-K unless you exceed both thresholds.
- New Form 1098-VI: Starting in 2026, lenders must report auto loan interest of $600 or more, including VINs and origination dates. This supports the new car loan interest deduction.
For business owners who pay contractors, the higher 1099-NEC threshold reduces your administrative burden — you won’t need to issue a 1099 for payments under $2,000.
The Interest Deductibility Fix — EBITDA Is Back
Before the OBBBA, business interest deductions were limited to 30% of EBIT (earnings before interest and taxes). The OBBBA restores the calculation to EBITDA (earnings before interest, taxes, depreciation, and amortization).
Why does this matter? Because EBITDA is a larger number than EBIT, businesses can now deduct more interest expense. For any company that’s financing equipment, expansion, or working capital, this means your interest payments are more likely to be fully deductible.
This is particularly powerful when combined with the restored bonus depreciation — you finance the equipment, write off 100% of the cost, and deduct the interest on the loan. The tax efficiency of borrowing to invest has never been this favorable.
How SBA 7(a) Lenders Are Positioned for the OBBBA Era
The OBBBA creates an environment where SBA 7(a) loans become even more attractive for capital investment. Here’s why:
NewtekOne (NEWT), now the third-largest SBA 7(a) lender in the U.S. by dollar approval volume, provides a case study. Despite headwinds from a government shutdown and SBA program changes, Newtek Bank originated $767.8 million in SBA 7(a) loans in 2025 across 8,431 loans spanning 50 states and 82 industries. Named Coleman Report Bank SBA Lender of the Year for 2026, NewtekOne operates as a fully digital, branchless bank with over $1.4 billion in deposits.
What this tells you as a business owner:
- SBA lending is going digital. You don’t need to walk into a branch to access an SBA 7(a) loan. Lenders like NewtekOne process everything online.
- The 75+ lender network matters. SBA 7(a) rates, terms, and approval criteria vary significantly by lender. The more lenders you compare, the better your deal.
- Capital stacking works. Combining an SBA 7(a) loan for general business purposes with a dedicated equipment financing line and a revolving credit facility lets you maximize the OBBBA’s expensing benefits across different asset classes.
Before you commit to any single lender or financing structure, check your funding options to see what combination of SBA, equipment financing, and credit lines you’d actually qualify for.
Building a Capital Stack to Maximize OBBBA Benefits
The smartest approach to 2026 capital investment isn’t relying on a single loan product. It’s building a capital stack — layering multiple financing types to match different needs:
- SBA 7(a) Loan — Up to $5 million for general business purposes. Lower rates, longer terms (up to 25 years for real estate, 10 years for equipment). Use for: expansion, working capital, larger equipment purchases.
- Equipment Financing — Dedicated lines for machinery, vehicles, and technology. Use for: specific assets that qualify for 100% bonus depreciation. The equipment itself serves as collateral, so approval can be faster and require less documentation.
- Revolving Credit Line — Flexible draw-and-repay structure for short-term needs. Use for: inventory, seasonal cash flow gaps, bridging between invoices and payments.
- Revenue-Based Financing — Payments scale with your revenue. Use for: businesses with fluctuating cash flow that need capital but want flexible repayment.
The OBBBA makes this stack more powerful because:
- Every qualifying asset you finance can be written off 100% in year one under Section 168(k)
- The first $2.5 million qualifies for Section 179 expensing across your entire portfolio
- Interest on all of these loans is more deductible under the restored EBITDA calculation
- R&D costs are immediately expensable instead of amortized over 5 years
The net result: the after-tax cost of financed capital investment in 2026 is lower than it’s been in years.
The One Big Beautiful Bill Act didn’t just restore old provisions — it created a once-in-a-decade window for small business capital investment. Permanent 100% bonus depreciation, doubled Section 179 limits, restored R&D expensing, expanded interest deductibility, and new personal deductions all stack together to dramatically reduce the real cost of borrowing and investing.
Some of these provisions are permanent. Others — like the tips deduction, overtime deduction, and senior standard deduction boost — expire after 2028. The window for retroactive R&D amended returns won’t stay open forever either.
If you’ve been delaying that equipment upgrade, fleet expansion, facility improvement, or technology investment, the OBBBA just handed you the strongest tax incentive environment since 2017. The combination of full expensing and improved interest deductibility means the cost of waiting is now higher than the cost of financing.