Industrial Revenue Bonds (IRB) TYPE OF FINANCING Bond securities issued by cities and counties to finance a growing business' land, buildings and equipment. Tax exempt IRBs allow holders an exemption from state and federal tax. ELIGIBILITY Businesses qualifying for taxable and tax-exempt IRBs must be creditworthy. Tax-exempt facilities include manufacturing facilities. Businesses qualifying for taxable IRBs must meet the broad guidelines outlined in K.S.A. 12-1740 -- 12-1749. RATE/TERM Company leases facility from the bond issuer. Rent payments go toward principal and interest. Company may gain title after repayment. PROGRAM SIZE GUIDELINES - Tax exempt issues may be as large as $1 million regardless of the company or project's size.
- Manufacturers may issue up to $10 million of tax exempt IRBs per project.
- A company may not have more than $40 million outstanding nationally at any one time.
- Taxable IRBs have no upper limit.
Community Development Block Grant (CDBG) TYPE OF FINANCING Low interest subordinated loans to businesses through communities for plant, equipment and infrastructure needs. ELIGIBILITY Awarded on a competitive basis for projects creating or retaining jobs. At least 51% must be held by low to moderate income persons. RATE/TERM Local governments dispense the loans to companies. Interest rates and terms are flexible and tailored to each company's needs. PROGRAM SIZE GUIDELINES - Maximum award is $35,000 per job created or retained.
- Maximum grant available is $750,000
Tax Increment Financing (TIF) TYPE OF FINANCING Costs of publicly provided improvements are covered by anticipated real estate tax revenue. This revenue retires the bonds sold to finance the development. ELIGIBILITY TIF is allowed only if development would not occur without public improvements. City must designate area to be improved as a "redevelopment" area. RATE/TERM - Taxes resulting from improvements are apportioned to a fund to pay for the redevelopment.
Farmers Home Administration (FmHA) TYPE OF FINANCING Business development loan guarantees for loans of $2 million, 80% guarantee for loans between $2 million and $5 million, loans over $5 million may receive a 70% guarantee. ELIGIBILITY Company is required to provide cash or other assets as collateral. Businesses must be outside of: cities populated by 50,000 or more, and areas with a population density of more than 100 people per square mile. PROGRAM SIZE GUIDELINES - Maximum loan amount is $10,000,000.
Small Business Administration 504 Program TYPE OF FINANCING Long-term subordinated, fixed-rate financing for up to 90% of a business' fixed assets. Program combines SBA and bank financing. SBA participation is limited to 40% of the project. ELIGIBILITY Business must be financially sound; net worth must be less than $6 million, and average net profit after tax must not exceed $2 million for the last two years. One job should be created or retained per $35,000 loaned. RATE/TERM - SBA provided funds are at a fixed rate generally below market rate.
- Loan length 10-20 years for land and buildings; 10 years for certain equipment and machinery.
PROGRAM SIZE GUIDELINES - SBA exposure is typically limited to $750,000.
Small Business Administration 7(A) Loan Guarantee TYPE OF FINANCING Guaranteed loans to provide businesses with financing for a variety of needs such as fixed assets and working capital. Guarantees of up to 90% of loans up to $155,000 or 85% of loans up to $750,000. ELIGIBILITY Borrower must use or occupy assets purchased with the loan. Business size limitations exist on manufacturers, wholesalers, services and retailers. RATE/TERM - Loans under 7 years: up to 2-1/4% over prime.
- Loans over 7 years: up to 2-3/4% over prime.
- Loan length depends on use of the proceeds, generally 5 to 25 years.
PROGRAM SIZE GUIDELINES - $750,000 is the maximum guarantee amount.
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