LOAN PROGRAMS
Small Business Administration Programs (SBA)
- SBA 7(A) Loan Guaranty Program
The SBA 7 Loan Guaranty is the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through conventional lending institutions. SBA 7 Loans offer financing for working capital or fixed assets through a conventional lending institution. More specifically the loan can be used to expand or renovate facilities; augment working capital; construct commercial buildings; purchase land or buildings; purchase machinery, equipment, and fixtures; finance receivables; refinance existing debt with compelling reason; finance seasonal lines of credit.
- SBA 504 Program
The U.S. Small Business Administration’s SBA 504 program provides small and medium-sized businesses with long-term fixed rate financing for the acquisition or construction of fixed assets. The participating private lender provides interim financing, advancing the full amount of project funds during the construction/acquisition period. After the project is completed, SBA reimburses the lender the amount of the original loan commitment.
- SBAExpress
SBAExpress is available for loans up to $350,000. The SBA guarantees up to 50% of the loan, and loans under $25,000 do not require collateral. Like most 7(a) loans, maturities are usually five to seven years for working capital and up to 25 years for real estate and equipment. Revolving lines of credit are allowed for a maximum of five years.
- CAPLines
CAPLines is a revolving line of credit designed to help small business owners meet their short-term and cyclical working capital financing needs. There are five loan programs under the CAPLines umbrella which may be used to finance seasonal working capital needs; finance direct costs for construction, service and supply contracts; finance purchase orders by obtaining advances against existing inventory and accounts receivable; and consolidate short-term debt.
- Export Working Capital Program
The EWCP provides pre- or post-shipment working capital financing for export activities. It is transaction-based and can be a revolving line of credit or structured for each purchase order, shipment or contract. The loan may not be used for refinancing fixed assets, marketing or setting up operations abroad.
Industrial Development Corporation (IDC)
The IDC is a private, business community focused investment company. IDC's primary purpose is to assist in the attraction of new businesses to Manistee County and to aid in the expansion of already existing businesses. The Alliance for Economic Success can assist existing and new business opportunities to develop and present loan requests to IDC's Board of Directors.
IDC prefers to have a "second or third" loan position on projects. They would like the primary financing to be covered by another entity, when their organization providing funds to cover specific remaining needs. IDC is flexible on financing terms and conditions, so businesses can request that their loans be structure in ways that take into account start-up situations and special needs such as product/service revenue cycles.
Northern Initiatives
Northern Initiatives loan program has funding necessary to assist with business start-ups and expansions. Loans are particularly targeted toward businesses that, for whatever reason, have found it difficult to meet traditional lending institution requirements. Northern Initiatives offers a wide range of loan packages designed to meet diverse business needs, ranging from small entrepreneurs to large manufacturers. Loans can be freestanding or made in conjunction with funds from local banks to complete a larger financing package (subordinated debt).
Northern Initiatives interest rates, while very comparable to local bank rates may be slightly higher, reflecting the level of risk associated with individual transactions. Loan amounts range from $2,000 to $500,000 with closing costs generally in the 1-2% range (plus all out-of-pocket expenses). Terms are generally tied to the planned use of funds borrowed and can range from one to seven years.
BOND PROGRAMS
- Private Activity Bonds (formerly Industrial Development Revenue Bonds)
Private activity bonds are an attractive source of financial assistance to economic development projects in Michigan. They provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates.
Public facilities, which generate a revenue stream, (parking structures, for instance) have traditionally been financed by municipalities through tax-exempt “revenue bonds.” Private activity bonds apply this same tax-exempt finance mechanism to the “public purpose” of economic development. The governmental unit borrows money from private capital markets, secured only by the project’s revenues rather than the government’s full faith and credit. Interest income earned on bonds issued by a governmental entity to finance a project for a private company which has demonstrated a good public purpose is exempt from federal, state, and local income taxes, thereby reducing the cost of capital (including the cost of letters of credit, remarketing fees, etc.) to an average 65-75% of prime.
TAX ABATEMENT & TAX CREDIT PROGRAMS
- Renaissance Zones
Manistee County has two renaissance sub zones. One zone is located in Manistee Township, with most of the property owned by the City of Manistee. The second sub zone is located in Kaleva. Businesses that locate on renaissance zones property are eligible for waivers of the following state and local taxes through 2015:
- State Personal Income Tax
- State Michigan Business Tax
- State Education Tax
- Local Real Property Tax
- Local Personal Property Tax
Taxes not exempt include federal taxes, social security taxes, state sales tax, unemployment insurance and workers compensation.
In December 2006 the Michigan legislator past a bill that allows for a municipality with a Renaissance zone, to have up to 10 zones, as well, the bill allows for existing zones to have their tax waivers timeframe to be extended. Contact AES for additional information about this significant incentive to locate your business in Manistee County!
- Brownfield Redevelopment
Brownfield is a term describing the obstacle to industrial or commercial property redevelopment caused by the threat of liability for existing contamination. In Michigan, that obstacle has been removed. Buyers and lenders are now reliably protected from liability under Michigan law.
In order to promote the redevelopment of Brownfield sites, the state of Michigan provides Single Business Tax (SBT) credits, on a case-by-case basis, for projects that redevelop a contaminated, blighted or functionally obsolete property. Credits are available for up to 10% of eligible investments, but no more than $30 million. Projects with total credits greater than $1 million require approval by the Michigan Economic Growth Authority (MEGA), with concurrence of the state treasurer. Projects with total credits of $1 million or less require approval by the chairperson of the MEGA. Applications for credits are authorized by MEDC.
Manistee County and the City of Manistee have both established Brownfield Redevelopment Authorities in order to provide focused attention to these type of site, and provide companies easy access and assistant to these financial incentives available from the State of Michigan. - Industrial property tax abatements – PA 198
Industrial property tax abatements provide incentives for Michigan manufacturers to build new plants, expand existing plants, renovate aging plants, or add new machinery and equipment.
This tax abatement is granted by the legislative body of the city, township, or village in which the facility is located. After a public hearing, the process is started by the municipality’s adoption of a resolution establishing a plant rehabilitation district for a rehabilitation project, or an industrial development district for a new project. A request for establishment of the district must be filed with the clerk prior to commencement of construction, alteration or installation of equipment. Once the district is established, the company may apply for an exemption from property taxes (real and personal) for up to 12 years. Instead of the property tax, the firm pays an Industrial Facilities Tax (IFT) that reflects the abatement savings. - Public Act 328 – Personal Property Tax Relief
Public Act 328 of 1998 allows distressed communities and all county seats (for the Manistee area, that means the City of Manistee) to abate all new personal property taxes in certain geographic areas to spur economic development.
Abatements include all millage, state and local. Locally approved applications are filed with the State Tax Commission (STC), which must approve or disapprove the local resolution within 60 days. The State Treasurer, with the written consent of the Michigan Economic Development Corporation, is required to provide advice to the STC as to whether the exemption is necessary to “reduce unemployment, promote economic growth, and increase capital investment.”
Eligible projects include manufacturing, mining, research and development, wholesale trade, and office operations. Retail businesses and casinos are not eligible. - Pollution Control Equipment Tax Exemption
Certified air and water pollution abatement equipment is 100% exempt from property taxes in Michigan. Certification is approved by Michigan Department of Environmental Quality.
TRAINING ASSISTANCE
Economic Development Job Training Program (EDJT)
The legislature has appropriated funds to the Michigan Economic Development Corporation (MEDC) for the administration of the Economic Development Job Training (EDJT) program. The EDJT program seeks to ensure that Michigan has the training resources to retain and attract business and people to move into the 21st Century with a highly skilled workforce. EDJT program provides a grant for specialized training required by an employer. The employer works with training providers to develop effective training.