Rural Small Business Lending Workshop Small Business Lending Workshop... · Rural Small Business...

transcript

Rural Small Business Lending Workshop"Financing Rural Small Business: Tools of the Trade“

Slide Presentations

Thursday, May 4, 2017 11:30 AM – 3:00 PM Chesapeake College Eastern Shore Higher Education Center – HEC 110

1000 College Circle Wye Mills, MD

Shannon McKay, PhDResearch Manager, Community Development

Financing Rural Small Business – Tools of the TradeChesapeake College, Eastern Shore CenterWye Mill, MarylandMay 4, 2017

Overview of the 2016 Small Business Credit Survey

The views expressed here are my own and do not necessarily reflect the views of the Federal Reserve Bank of Richmond or the Federal Reserve System.

Small Business Credit Survey started in 2014.

It is conducted every fall beginning in September.

Respondent pool is based on a convenience sample.

Data is weighted by firm age, geography, industry and employment size.

All 12 Federal Reserve Banks participated in 2016.

Background and Methodology

Gives policy makers and lenders a better understanding of the needs of small businesses to inform incentive, protections, and lending product development.

Provides small businesses and technical assistance providers with information to make informed decisions about credit strategies.

Offers researchers more information to begin to discern what it will help these businesses grow more, grow faster, and grow the economy.

Purpose

Employer firm performance similar in 2016 compared to 2015 except for revenue growth.

Source: 2016 FRS Small Business Credit Survey

A larger share of Maryland employer firms are anticipating revenue and employment growth in 2017.

EMPLOYER FIRM EXPECTATIONS INDEX, Next 12 Months (% of employer firms)

Most businesses face financial challenges.

Types of Financial Challenges, Prior 12 Months (% of employer firms)

Personal credit is business credit.

USE OF PERSONAL AND BUSINESS CREDIT SCORES BY REVENUE SIZE OF FIRM (% of employer firms)

More Maryland employer firms applied for credit in the prior 12 months.

Prior 12 months

DEMAND FOR FINANCING (% of employer firms)

Sixty percent of applicants had a financing shortfall; smaller revenue firms had the biggest gap.

Banks are the most common source of credit.CREDIT SOURCES APPLIED TO BY REVENUE SIZE OF FIRM (% of loan/line of credit applicants)

Approval rate success greatest at CDFIs and small banks.

Borrower satisfaction highest with small banks and credit unions.

All firms (n=1,830)

$1M or Less (n=1,031)

More than $1M (n=753)

Weak business performance

31 31 32

Insufficient collateral 31 30 31

Low credit score 29 34 15

Too much debt already 28 29 28

Insufficient credit history 28 32 12

Unsure 13 12 17

Reasons for credit denial by revenue size of firm (% of applicants with a financing shortfall)

Notable differences in reasons for credit denial.

Distribution Partner Benchmark Report

Next Steps Report on the self-employed available later this

Data collection for the 2017 round of the Small Business Credit Survey will kick off in September.

Federal Reserve Bank of Richmond will be working to expand its survey partner recruitment in 2017.

Find out more information: https://www.richmondfed.org/community_development(General);

https://www.richmondfed.org/community_development/resource_centers/small_business (Small Business)

Shannon McKay(410) 576-3427shannon.mckay@rich.frb.org

Thank You!

Secretary Kenneth C. Holt

Maryland Department of Housing and Community Development

Neighborhood BusinessWorksProgram Overview

May 4, 2017Financing Small Business

NEIGHBORHOOD BUSINESSWORKS

• Maryland DHCD’s Small Business Loan Program est. 1995

• Flexible Financial Support of Small Business

• Broad Range of Financing Tools

• Recent Statutory Changes (HB 326 in 2016 Legislative Session) Enable Growth in Years Ahead

WHERE ARE WE HEADED?

Passage of HB326 in 2016 Legislative Session –Bravo!•Sustainable Communities & Priority Funding Areas

•Lending volume to grow from $5 million to $50 million annually by 2019

•Leveraging expertise and experience of Community Development Administration and Maryland Housing Fund

•Seeking input from our financing partners as we plan for growth

Priority Funding Areas and Sustainable Communities in Maryland

HOW DO WE GET THERE?• Issue bonds and raise other capital through CDA and

• Financial Partnerships with Banks and CDFI’s, such as:– Loan Participations: allows Bank/CDFI to reduce borrower

exposure and/or increase loan amount– Collaborative Financing: pair NBW with Bank/CDFI financing for

permanent take-outs, bridge loans, construction loans, etc.– Key Redevelopment Investments: leveraged loans for New

Market Tax Credit Transactions, other complicated financings– Strategic Subsidies: targeted recoverable loans/grants for

project-specific incentives such as third-party reports, loan loss reserves, etc.

– Credit Enhancement and Guarantees: risk reduction opportunity for key investments

– Other creative ideas are encouraged

NBW FINANCING: GENERAL TERMS

• Up to $5 million per project

• Loan terms from 5 – 20 years

• Interest rates vary based on risk of loan (generally 5-10%)

• Borrower contribution required

• Collateral and personal guarantees required

MARYLAND BUSINESS RECOVERY LOAN PROGRAM (MBR)

• Created in response to civil unrest in Baltimore City in Spring of 2015

• Successful in providing funding for repairs, inventory and working capital to:

- 49 small businesses- Total amount of loans: $1,500,000- Average Loan Amount: $30,612

ELLICOTT CITY RECOVERY LOAN PROGRAM

• Created in response to the flooding disaster in the Main Street district on July 30, 2016

• Currently providing funding for repairs, inventory losses, clean-up, lost revenues and working capital to small business and commercial property owners. To date:- 27 small businesses- Total amount of loans: $1,642,000

• $2.5 Million State Catastrophic Funds• $2.5 Million VLT Funds

NBW ELIGIBLE APPLICANTS

• Lending Partners and Intermediaries• Nonprofit Organizations • Commercial Property Owners • Commercial Property Tenants• Developers • Retail, Manufacturers, Service, Mixed Use Projects

NBW ELIGIBLE USES OF FUNDS

• Real estate acquisition• New construction or renovation• Leasehold improvements• Purchase of equipment & machinery• Purchase of inventory• Costs associated with business opening or expansion• Working capital • Guarantees, credit enhancement and other forms of

credit support

NBW RESULTS: INCEPTION – FY2016

• Funded $95 million • Participated in 650+ projects • Created/sustained 13,000+ jobs across Maryland • Leveraged $418 million in private investment

HOW ARE WE DOING?• FY 17 To Date:

– Funded 39 projects for $8.6 million

– Leveraged over $40.8 million in private capital

– Instrumental in the on-going recovery efforts in Ellicott City resulting in 27 closed loans to flood damaged businesses totaling over $1.6 million

– Additional $5 million in funding opportunities in our underwriting pipeline

NEIGHBORHOOD BUSINESSWORKS PROJECTS

Arrow Bicycle, HyattsvilleJoie De Vivre, Cambridge

Big Bad Woof, HyattsvilleRoscoe’s Neapolitan Pizzeria, Takoma Park

THANK YOUFor More Information Contact:

Michael Haloskey, Director Business LendingPhone: 301-429-7523Email: michael.haloskey@maryland.gov

Cheivelle Hill, Senior Loan UnderwriterPhone: 301-429-7518Email: cheivelle.hill@maryland.gov

Colleen Cord-Malone, Program CoordinatorPhone: 301-429-7517Email: colleen.cord-malone@maryland.gov

Aisha Taylor, Loan UnderwriterPhone: 301-429-7721Email: aisha.taylor@maryland.gov

USDA Loan Guarantee Programs: Increasing Access to Capital in

Rural America

May 4, 2017

Welcome

Rural Energy for America Guarantee

Business Loan Guarantee

Community Facility Guarantee

Loan Guarantee Programs:

Business & Energy Location Eligibility Map

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Business/Energy: Use map tool. Substantial number of rural areas available for business lending.

Community Programs: Any community 20,000 or less.

Contact USDA office for site assistance.

Rural Energy for America Program

Guaranteed Loan

Rural Energy For America Program

Eligible Borrowers: 1. Agricultural producers 2. Rural small businesses

Eligible Projects:1. Purchase renewable

energy systems2. Implement efficiency

improvements

LOAN SIZE• Minimum Loan Amount: $5,000• Maximum Loan Amount: $25,000,000

(Up to 75% of project cost)

GUARANTEE• 85% for loans $600,000 or

less.• 80% for loans over

$600,000 up to $5 Million• 70% for loans over $5

Million up to $10 Million• 60% for loans over $10

Million

LEVERAGE REQUIRED• 25% of project costs – sub debt,

equity, local incentives, other.

INTEREST RATE• Fixed or Variable; if variable can be

adjusted quarterly• Negotiated between lender and borrower

MAXIMUM TERM LIMITS• Working Capital – 7 Years• Machinery & Equipment – 15 Years (or useful life)

• Real Estate – 30 Years

CLIENT BENEFITS

Access tax incentives Competitive Interest Rates USDA review of technology

Conclusion. Next Up: B&I Guarantees

Lower operating costs Leverage utility incentives Longer Term – lower payment

Business & Industry Loan Guarantee Program

Funding LevelsFY 2017 :

AllocationDelaware &Maryland $15.6 million

Ample national reserve - $219 million - helps states with smaller allocations fund more or larger projects.

Guarantee Program Purposes

Purpose is to improve, develop, or finance businesses in rural communities

Bolster private credit structure through the guarantee of quality loans that will provide lasting community benefits

Not intended for marginal or substandard loans or relief for lenders having such loans

Loan PurposesReal estate purchase & improvementsMachinery and equipmentWorking capitalDebt refinancingExisting exposure – up to 49% of new loan100% of debt from another lender100% of federally guaranteed debt – even

existing lender Ag Production – limitations

Guarantee FeesFees

• Initial Guarantee Fee – 3 percent – OR:• NEW! 1 percent – for qualified projects

• Loan $5 million or less

• Annual Renewal Fee – 0.5%

• May be included in loan subject to collateral

Loan Limits and Percentage of Guarantee

Loan Limits• $10 Million - standard• $25 Million – must be “High Priority” score• $40 Million for rural cooperative organizations

NEW! Guarantor Limit - $50 Million

Percent of Guarantee Limits• 90 Percent for “High Priority” or Lending / Regulatory Limitations• 80 Percent for loans less than $5 million• 70 Percent for loans between $5 and $10 million• 60 Percent for loans over $10 million

Loan Structure Highly Flexible: Negotiated by the lender and

borrower - approved by USDA Fixed/Variable/Combination Interest Rates Maximum terms

• Real estate - 30 years• Machinery and equipment - 15 years or useful life• Working capital - 7 years

No balloon payments Reasonable prepayment fees allowed May hold, participate or sell to manage risk

Conclusion. Next Up: Community Facilities 47

Community Facility LoanGuarantee Program

Types of Facilities

• Hospitals• Nursing Homes• Schools• Libraries• Municipal Buildings• College Dormitory• Community Centers

Eligible Communities

• Public BodiesPublic Bodies include counties, cities, towns, boroughs, special authority districts, and other local units of government

• NonprofitsOrganizations that operate on a not for profit basis

• Indian TribesIndian Tribes can be federally or state recognized

Guaranteed Loan Highlights

• Loan guarantees up to 90%. Rates and terms negotiated between lender and client

• No limit on dollar amount – up to 100% of construction cost

• Eligible rural areas: 20,000 population or less• Eligible lenders: Banks, thrifts, Farm Credit

System, regulated insurance companies.• One-percent guarantee fee (one-time only)

Up Next: Contact Information

USDA Local Contacts• Business & Industry Guaranteed Loan

Letitia Nichols – Business Programs DirectorLetitia.Nichols@de.usda.gov302-857-3588

• Rural Energy for America Guaranteed LoanBruce Weaver – State Energy CoordinatorBruce.Weaver@de.usda.gov302-857-3629

• Community Facilities Guaranteed LoanDenise MacLeish – Community Programs Director Denise.Macleish@de.usda.gov302-857-3627

- END -

U.S. Small Business AdministrationPrograms & Services

The State of Rural Small Business: “Tools of the Trade”

Advantage of SBA’s GuarantyFactors that determine

this range: Overall economy Lenders’ regulatory

environment Lenders’ liquidity (or lack

thereof) Lenders’ competitive

environment Least Viable Business Profile

No management experience

No repayment ability Impractical business

idea No financial reserves No equity investment

“No Go” Range SBA Range

Most Viable Business Profile

Experienced management High Debt Service Cash flow Sterling credit Generous collateral Sound business idea Financial reserve

Lender’s Comfort RangeLenders are comfortable making loans without SBA’s Guaranty

Why Do Lenders Use the SBA Guaranty New Ownership/Business Acquisition Start-up or certain types of businesses Collateral may be inadequate to meet normal

underwriting Longer maturities are needed Mitigate risk exposure Lender’s legal or policy limit Business leverage Business Expansion Projections based cash flow

Financing—What Does SBA Look For Owners and operators with good credit & character

Feasible business plan, possess management ability and have experience in field.Sufficient funds, including SBA guaranteed loan, to operate the business on a sound financial basisAdequate equity investment in the businessSufficient collateral, however; SBA looks at cash flow and not at collateral Demonstrate repayment abilityBe operated for profit & not engaged in lending, real-estate development, investments or speculation

Eligible Use of Loan ProceedsSBA loans may be used to:Purchase machinery, equipment, fixtures, buildingsand land for business;Finance receivables and augment working capital;Refinance existing debt - including credit card debt (with compelling reason);Finance seasonal lines of credit; and/orExpand, renovate facilities;Construct commercial buildings.Change of ownership/purchase of a businessMost legitimate business purposes

7(a) Loan Guarantee ProgramMaximum 7(a) Loan Amount of $5 million50%-90% SBA Guaranty available depending on program and loan

amount

85% guarantee on loans of $150,000 or less

75% guarantee on loans >$150,000

50% guarantee on SBAExpress loans up to $350,000

Up to 90% guarantee on Export loan programs

Guarantee Fees based on guaranteed portion of the loanNo fees for loans under $150K approved during FY’173% loans of $150K - $700K 3.5% up to $1M Plus 3.75% on portion over $1M

7(a) Loan Guarantee Program- cont.SBAExpress Program Maximum Loan $350,000 50% SBA Guaranty (LOC or Term)Rates higher than traditional 7a loan rates can be charged

Small 7a Loan Program Credit Scored - Must meet minimum score of 140

Maximum Loan Amount: $350,000

Term loans only

Abbreviated underwriting requirements

Lender loan documents OR SBA documents may be used

SBA Community AdvantageCommunity Advantage Loans

Community Advantage is a pilot loan program introduced by the U.S. Small Business Administration (SBA) to meet the credit, management, and technical assistance needs of small businesses in underserved markets. Community Advantage provides mission-based lenders access to 7(a) loan guaranties as high as 85% for loans up to $250,000.

LOAN PROCESSING SBA’s New Streamlined Online Lending Platform

SBA OneKey Features:

End to end Loan Origination Solution that currently supports 7a Standard, 7a Small, SBA Express and Community Advantage

Intuitive screens that offer context-sensitive help

Platform use at no cost to lenders61

Fixed Asset Financing SBA 504 Loan Program in a NutShell

Maximum debenture - $5,000,000

50% of project cost is typically financed by a Bank- 1st

Mortgage

40% of project cost is financed by CDC – 2nd Mortgage

10% of project cost is equity from borrower

USE of PROCEEDS:

Purchase equipment, Acquisition of land & buildings, New Construction, Building Expansion, Refinance

Edward KnoxDeputy District Director

edward.knox@sba.gov

Sam ReprogelLead Lender Relations Specialist

(410) 244-3325samuel.reprogel@sba.gov

- END -63

Financing Rural Small Business”Tools of the Trade”

May 4, 2017

Linda ArnoldFinancial Programs Officer

www.marbidco.org

“Is an Ag Business Development/Financial Intermediary Org. Serving All of Maryland”

With afocus on:

- Farming- Forestry- Seafood- Aquaculture

Core Rural (and urban-edge) Business Development – several secured lending and small grant investment programs that are funded from the Agricultural Stewardship Act of 2006.

Rural Land Preservation Facilitation – programs that are funded from dedicated special funds, or that are offered with other agencies (conduit finance).

Higher Risk or Specialty Lending – special revolving loan programs that are funded by partnering organizations for targeted business/environmental purposes (e.g., farm energy efficiency and shellfish aquaculture).

Commercial Banks and Farm Credit System State Agencies (MDA, DNR, Commerce, MCE,

MEA, TEDCO, etc.) USDA (including FSA, NRCS and Rural Dev)

and other Federal Agencies Regional rural planning/development councils Local economic development offices Farm groups and rural industry associations MD Ag Land Preservation Foundation (MALPF) Private nonprofit foundations

Established more than a dozen programs that have made investments in some 411 agricultural and rural enterprises around the State totaling over $42 million.

Partnered with 17 banks and 4 local government revolving loan funds on projects, and leveraging over $115 million in commercial bank financing.

Helped 217 young or beginning farmers.

Financed 148 farm diversification (value added processing) projects.

MARBIDCO offers 8 Lending Programs today.

5of the loan programs are offered using MARBIDCO resources –- these loans require collateral security.

3other loan programs are for special purposes and involve a higher level of credit risk (unsecured lending).

The “workhorse program” is the Maryland Resource-Based Industry Financing Fund Loan (MRBIFF)

NOTE: All loans reviewed and approved by a loan review committee

Offers low-interest (3.25% APR initially) loans for the purchase of land and capital equipment.

Maximum Loan Amount - $250,000 ($350,000 for land purchase & $550,000 for a major project).

Financial commitment: Provide supplemental loan proceeds within

a range of 25% to 40% of the total commercial financing needed.

MARBIDCO will accept a junior lien position in most situations.

Complements the financial services offered by commercial lenders by helping to make rural business “gap” financing both available and affordable.

Flexible loan terms to match and enhance commercial lender offerings.

Rural Business Equipment & Working Capital Loan Fund

Maryland Vineyard & Tree Fruit Planting Loan Fund

Forestry Equipment and Working Capital Loan Fund

Agricultural Cooperatives Equity Investment Fund

Rural Business Energy Efficiency Improvement Loan

Maryland Shellfish Aquaculture Financing Fund

Maryland Remote Setting Aquaculture Financing Fund

Local Government Ag/RBI Project Cost Share Program- Funds projects jointly with farmers and county economic

development offices

Maryland Value Added Producer Grants- USDA VAPG Matching Grants (currently closed) - MVAPG Capital Assets/Equipment (currently closed)

Urban Ag Commercial Lending Incentive Grants (projects located in municipalities or inside the two beltways)

- Funded with support from MidAtlantic Farm Credit- Helps city farmers to get bank loans- Grant amounts from $1,000 to $7,500

Next Generation FarmlandAcquisition Program

Established to help young and beginning farmers who have trouble entering the agricultural profession due to high farmland costs and lack of access to adequate financial capital.

Approved applicants will enter into a “easement purchase option contract” for the subject property.

MARBIDCO will pay 51% of the Fair Market Value of the agricultural land.

Beginning farmer will have a period of 4 or 7 years (depending on default easement holder) to sell the permanent conservation easement to a rural land conservation program.

Linda ArnoldFinancial Programs Officer

larnold@marbidco.orgwww.marbidco.org

- END -

Any Questions?

Community Lending Solutions

Karen Kollias, Director110 S. Bedford Street

Georgetown, DE 19947(302) 855-1370

- END -

Maryland Capital Enterprises, Inc.

George KosteExecutive Director

Maryland Capital Enterprisesinfo@marylandcapital.org

Maryland Capital Enterprises

Maryland Capital Enterprises, Inc. (MCE) is a private nonprofit that helps build communities by supporting small business owners who are committed to their businesses, but who otherwise lack the collateral or credit history that can give them access to conventional loans and other financial products.

MCE has been operating on the Eastern Shore of Maryland for over 18 years, where it provides small business loans, business counseling and business education to help entrepreneurs start, expand or purchase existing businesses. In 2012, MCE expanded its operations from to Baltimore City, Baltimore County and Anne Arundel County. Additionally, in 2013, MCE opened a Women’s Business Center to assist women entrepreneurs with training, consulting, counseling, credit development & network opportunities for women looking to start or expand a business.

For more information, check out our website at www.marylandcapital.org.

MCE (Maryland Capital Enterprises)The only Maryland lender with all four certifications, MCE is a:

• Community Development Financial Institution (CDFI)

• SBA Intermediary Micro-lender• USDA Intermediary Micro-lender• State of Maryland Intermediary Micro-lender

MCE also provides counseling, training, assistance developing business plans, and more.

MCE Small Business Loans • Loan Amounts range from $5,000 to $50,000 for

startups, $5,000 to $150,000 for business expansions.

• Term can be 1-10 years (depending on loan size).

• Interest Rates are currently set at 6-12%.

• Collateral is required.

• All owners with 20% or more interest must personally guarantee loan.

• Application fee is $75 + $10 credit report fee (per owner) paid up front; 1% closing fee and legal reserve fee from $250-$1000 based on loan amount and can be deducted from loan proceeds.

• Automatic ACH debit required for all loans.

• No penalties for prepayment.

• Semi-annual site visits to your business required.• Sample loan uses include build out of leased space, furniture & equipment,

working capital (i.e. salaries, business supplies, etc.).

Eligibility Criteria

Applicants are judged on...

• Clearly established business idea; thoroughness of business plan.• Experience in the field.• Strength of cash flow.• Strength of collateral.

At MCE, loan applications are reviewed by a committee of local volunteers, bankers and community and business leaders.

• Reasonable credit. That is credit at least good and consistent for the last 12 months, no bankruptcies in the last 2 years.

• General economic conditions for the venture.• Ability to repay the loan – can the applicant get

back into the workforce if they do not make the business work?

Application Documents

• Business Plan and Cash Flow Projections➡ Statement of how this loan will help you➡ Explanation of credit

• Profit & Loss Statement (last 2 years)• Most recent Quarterly Balance Sheet• Business Federal Tax Returns (last 2 years)• Personal Federal Tax Returns (last 2 years)• Reference letters (optional but preferred)• Other relevant attachments, (proposed lease,

estimates, invoices, contracts, etc.)

Forms• MCE/WBC Intake Form (online)• Business Loan Application for New [or Existing] Businesses• Personal Information Supplement

Supporting Documents

Contact:Maurice Amesinfo@marylandcapital.orgwww.marylandcapital.org

• MCE accepts loan applications once/month.

What happens next?

Unless adjusted for holidays, the deadline to submit a loan application is always the 1st Friday of the month. The Loan Committee meets on the 4th Friday of the month, and determines the amount, the rate and the term. A commitment letter is issued. Approved loans are usually funded within 2-4weeks of approval.

5 Things to Remember When Applying for Business Capital

• DON’T QUIT YOUR DAY JOB You will be asked about your household income. The most important aspect in lending capital is “CAN YOU PAY IT BACK!!!”

• UNLESS YOU ARE AN ACCOUNTANT, YOU NEED AN ACCOUNTANT Entrepreneurs feel they can save money by handling their own finances. This is the fastest way to get in trouble. Accountants provide a second set of eyes on your business. They will keep your taxes paid so you don’t face any federal or state tax liens. They are dedicated to ONE key piece of your business, whereas you are trying to juggle multiple tasks.

• ASK FOR HELP Starting a small business is not easy. There are many resources available at low or no-cost to you. Reach out to the SBDC, SCORE, and organizations like MCE. Statistically only 20% of businesses are successful in the first 18 months.

• PUT YOUR MONEY IN THE BANK – ALL OF IT Lenders like to see deposits. You need to present a positive, but accurate position of your situation. Again this goes back to “CAN YOU PAY IT BACK!!!”

• NO BUSINESS IS AN ISLAND Entrepreneurial ventures are dependent on their community. Make some time become involved. Local charities, Chamber’s of Commerce, Rotary are some examples of opportunities for you to give back to the community and network your business.

- END -

The Department of Commerce, Office of Finance Programs (OFP) provides the business community financing and incentive based solutions for economic development projects to maximize job creation, retention and capital investment for each dollar invested. To remain competitive in the market place, OFP responds quickly to changing requirements with the development of incentives that address the identifiable needs of the business community.

FINANCE INCENTIVES PROVIDE:

• Entrepreneurs with access to capital markets;• The funding of economic development efforts for local jurisdictions;• Additional employment opportunities through the attraction, creation, expansion and retention of business ventures; and• Incentives that encourage capital investments, as well as significant job creation and retention opportunities.

BUSINESS RESOURCES

MARYLAND ECONOMIC DEVELOPMENT ASSISTANCE AUTHORITY AND FUND (MEDAAF)This flexible and broad based program funds grants, loans and investments to support economic development initiatives. Uses include business attraction and retention, infrastructure support, Brownfield redevelopment, arts and entertainment districts, daycare, revolving loan funds and local strategic planning. Projects must be within Priority Funding Areas and Eligible Industry Sectors. Awards are made on a competitive basis.

Maryland Industrial Development Financing Authority (MIDFA)MIDFA encourages private sector investments through the use of insurance, the issuance of tax-exempt and taxable revenue bonds, and linked deposits. Insurance reduces the lender’s credit risk. All MIDFA projects must be in a Priority Funding Area.

Economic Development Opportunities Program Fund (Sunny Day)The fund supports extraordinary economic development opportunities that create and retain employment as well as create significant capital investments. Historically, the Sunny Day Fund supported significant business attraction and retention, and information technology and life science park development. Projects must create substantial employment in areas of high unemployment and are evaluated on a competitive basis.

Maryland Small Business Development Financing Authority (MSBDFA)Created to promote the viability and expansion of businesses owned by economically and socially disadvantaged entrepreneurs, MSBDFA clients include all small businesses unable to obtain adequate business financing on reasonable terms through normal financing channels. A private contractor manages the four MSBDFA components and the Department provides financing for the approved small businesses. The program includes a guaranty fund, contract financing, a surety bond program, and an equity participation investment component.

Military Personnel and Veteran-Owned Small Business No-Interest Loan Program (MPVOLP)This program provides loans of up to $50,000, from one to eight years, for businesses owned by military reservists, service-disabled veterans, active duty National Guard personnel and businesses that employ or ARE owned by such persons.

FEDERAL INCENTIVES

Community Development Block Grant (CDBG)This program assists local governments in implementing commercial and industrial economic development projects. Approved program funds are disbursed to eligible local jurisdictions as conditional grants and used for public improvements for business start-up or expansion or business loans. Projects must create jobs with the majority targeted to individuals from low to moderate income or eliminate blight conditions that impede commercial and industrial development. Fund uses include acquiring fixed assets, infrastructure and feasibility studies.

Maryland Economic Adjustment Fund (MEAF)MEAF assists small businesses with upgrading manufacturing operations, developing commercial applications for technology, or enter into and compete in new economic markets. Eligible businesses include manufacturers, wholesalers, service companies, and skilled trades. Funds can be used for working capital machinery and equipment, building renovations, real estate acquisitions and site improvements.

Major Tax Incentives For Economic Development

1) Cybersecurity Investment Incentive Tax Credit2) Employer Security Clearance Costs (ESCC) Tax Credit3) Job Creation Tax Credit4) Biotechnology Investment Incentive Tax Credit5) One Maryland Tax Credit6) Research and Development Tax Credit7) Enterprise Zone Tax Credit8) Wineries and Vineyards Tax Credit9) Brownfields Revitalization Incentive Program10) RISE Zone (RISE) Tax Credit11) BRAC Zone

Additional Information Can Be Found On Commerce Website

http://commerce.maryland.govor Contact me for more informationJoel C. McCreajoel.mccrea@maryland.gov410-767-63771-877-821-0099

- END -