Location:
FEDERAL ASSISTANCE PROGRAMS; SMALL BUSINESS; STATE AID;
Scope:
Background; Program Description;

OLR Research Report


December 8, 2011

 

2011-R-0452

SMALL BUSINESS ASSISTANCE PROGRAMS

By: John Rappa, Chief Analyst

You asked for a list of state and federal small business assistance programs.

Attachments 1 and 2, respectively, summarize the state and federal programs providing financing and tax incentives to a broad range of businesses for various purposes, including constructing facilities and purchasing new machines.

 

The number of programs and implementing agencies could make it hard for small business owners to identify the ones that meet their needs. But several organizations can help perform this task, including the following:

1. Connecticut Economic Resource Center's Business Response Center (http://www.cerc.com/Content/Connecticutand_39_s_Business_Response_Center.asp),

2. Department of Economic and Community Development's Small Business Affairs Office (http://www.ct.gov/ecd/cwp/view.asp?a=3931&q=462650),

3. and Small Business Administration (SBA) (http://www.sba.gov/category/navigation-structure/loans-grants).

Attachment 1: Economic Development Loan and Grant Programs by Assistance Limits

Program and Agency

Assistance Limits

Assistance Terms

Eligible Uses

Micro Loan Guarantees for Women and Minority Business Owners (with 50 or fewer employees), Community Economic Development Fund (CEDF) (http://www.cedf.com/loan-enhancements/)

$5,000-$50,000

Flexible

Working Capital

Machinery and Equipment

Inventory

Legal

SBA Micro Loans, CEDF (http://www.cedf.com/sba-microloan/)

$35,000

Three to six years

Working Capital

Machinery and Equipment

Inventory

Standard Loans, CEDF (http://www.cedf.com/standard-loans/)

$50,000-$250,000

Tied to business' cash flow

Working Capital

Machinery and Equipment

Inventory

Owner-Occupied Real Estate

Legal

Grow Your Business Loans, CEDF

(http://www.cedf.com/grow-your-business-loan/)

Up to $250,000

Tied to business' cash flow

Fund expansion of existing business

Working Capital

Machinery and Equipment

Inventory

Owner-Occupied Real Estate

Legal

Urbank, Connecticut Development Authority (CDA) (http://www.ctcda.com/Financing/Small_and_Early_Stage_Business/URBANK/)

Up to $350,000

Interest rate, terms, and maturity determined by lender

Capable of repaying debt

1.5%-5% fees

Working capital

Machinery and equipment

Purchase, construct, expand or upgrade facilities

Line-of-Credit to Term Loans, CDA (http://www.ctcda.com/Financing/Loans_and_Guarantees/
LINE_OF_CREDIT_TO_TERM_LOANS/
)

$250,000-$1 million

Owner's personal guarantee

$20,000 per job created or retained

Capable of repaying debt

Revenue producing equipment

IT upgrades

Building expansions

Early Stage Business Loans, CDA (http://www.ctcda.com/Financing/
Small_and_Early_Stage_Business/EARLY_STAGE/
)

Up to $ 5 million

Based on business opportunity

Owner's personal guarantee

Equity interest

Maturity tailored to transaction

Working capital

Machinery and equipment

Purchase, construct, expand or upgrade facilities

Mortgages on owner-occupied real property

Direct Loans, CDA

(http://www.ctcda.com/Financing/Loans_and_Guarantees/DIRECT_LOANS/)

$250,000--$5 million

Owner's personal guarantee

$20,000 per job created or retain

Capable of repaying debt

Up to 20 years repayment

Firm must sell most of its products and services out of state and create jobs

Working Capital

Machinery and Equipment

Purchase, construct, expand, or upgrade facility

Mortgages or owner-occupied real property

Brownfields cleanup and redevelopment

Guaranteed Loans, CDA (http://www.ctcda.com/Financing/Loans_and_Guarantees/
GUARANTEED_LOANS/
)

Guarantee up to 40% of principal

Owner's personal guarantee

$20,000 per job created or retain

Capable of repaying debt

Up to 20 years repayment

Firm must sell most of its products and services out of state and create jobs

Interest rate, terms, and maturity determined by lender

1.5% commitment fee (up to $25,000)

2.0% annual guarantee fee

Working Capital

Machinery and Equipment

Purchasing, constructing, expanding, or upgrading facility

Mortgages or owner-occupied real property

Brownfields cleanup and redevelopment

Finance foreign trade or receivables

Participating Loans, CDA (http://www.ctcda.com/Financing/Loans_and_Guarantees/
PARTICIPATING_LOANS/
)

$250,000-$5 million

Owner's personal guarantee

$20,000 per job created or retain

Capable of repaying debt

Up to 20 years repayment

Firm must sell most of its products and services out of state and create jobs

Interest rate, terms, and maturity determined by lender

Participation funded at closing

Working Capital

Machinery and Equipment

Purchasing, constructing, expanding, or upgrading facility

Mortgages or owner-occupied real property

Brownfields cleanup and redevelopment

SBA 504 Debentures, CDA (http://www.ctcda.com/Financing/Specialty_Programs/
SBA_504_DEBENTURES/
)

SBA guarantee up to $4 million

Lender provides 50% of investment at fixed or variable rate

Business provides 40% through sale of long-term debenture (unsecured bond) guaranteed by SBA and funded by private sources

Business provides remaining 10%

Machinery and Equipment

Purchase, construct, expand, or upgrade facility

Leasehold improvements

Owner-occupied buildings

Technology-Intensive Businesses and Projects, CDA (http://www.ctcda.com/Financing/Specialty_Programs/
TECHNOLOGY_INTENSIVE
)

Up to $5 million

Up to 20-year terms

Appropriate to business opportunity

Owner's personal guarantee

Equity interest when appropriate

$20,000 per job created or retain

Working capital

Software, hardware, and infrastructure

Machinery and equipment

Purchase, construct, or expand facilities

Direct Inducement Loans (i.e., to encourage a business to expand or relocate in Connecticut), CDA (http://www.ctcda.com/Financing/Specialty_Programs/
ECONOMIC_INDUCEMENT_FINANCING/
)

Up to $ 5 million

Up to 20 years

$20,000 per job created or retain

Working capital

Machinery and equipment

Purchase, construct, or expand facilities

Mortgages on owner-occupied property

Connecticut Credit Consortium Program (for businesses with 50 or fewer employees Department of Economic and Community Development (DECD, http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=463276)

Up to $500,000 in direct loans and credit lines

Up to 10-year term

4% interest rate

Machinery and equipment

Land and facilities

Property improvements

Small Business Express Program, Revolving Loan Fund (DECD, http://www.ct.gov/ecd/cwp/view.asp?a=3931&q=489792), PA 11-1, OSS

$10,000 – 100,000

Up to 4% interest

Maximum five-year term

DECD determines other loan terms, conditions, and collateral requirements to prioritize job growth and retention

Acquiring machinery and equipment

Construction or leasehold improvements

Relocation costs

Working capital

Small Business Express Program, Job Creation Incentive Loans (DECD, http://www.ct.gov/ecd/cwp/view.asp?a=3931&q=489792), PA 11-1, OSS

$10,000 – 250,000 forgivable loans

Loan forgiveness based on attainment of job goals

DECD determines other loan terms, conditions, and collateral requirements to prioritize job growth and retention

Training

Marketing

Working capital

Other commissioner-approved expenses that support job creation

Small Business Express Program, Matching Grants (DECD, http://www.ct.gov/ecd/cwp/view.asp?a=3931&q=489792), PA 11-1, OSS

$10,000 – 100,000 grants

Business must match state grants

New and ongoing training

Working capital

Acquiring machinery and equipment

Construction or leasehold improvements

Relocation within state

Other commissioner-approved expenses

Manufacturing Assistance Act (MAA), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=253408)

Fixed percent of costs depending on project's location or purpose

Range: Up to 90% in 17 targeted investment communities to up to 50% of costs in other communities

Commissioner sets terms and conditions

State Bond Commission sets interest rate

Feasibility studies, engineering, appraisals, and other planning activities

Property and machinery and equipment purchases

Facility construction and site improvements

Relocation costs

Working capital

Job training, day care, energy conservation, pollution control, and other specified business support services

First Five Program (PA 11-86 as amended by PA 11-1, OSS), DECD (New program)

Up to 100% MAA Financing

Commissioner's discretion

Same as above

CDC/504 Loan Program, Federal Small Business Administration (SBA)

(http://www.sba.gov/content/cdc504-loan-program) (for businesses with net worth under $7.5 million and after tax income under $2.5 million)

Up to 100% loan guarantees for loans up to $2.0 m

Create or retain one job per $65,000 of SBA assistance

Land and building acquisition

Property improvements

Facility construction, renovation, or conversion

Machinery and equipment purchase

Small Business Subsidized Training and Employment Program (Department of Labor (DOL)), PA 11-1, OSS

Up to $20 per hour subsidy for new employee's training and compensation

Subsidy amount phases out over employee's first six months of employment

Business must hire new employee who

was unemployed immediately before being hired,

resides in a municipality with relatively high unemployment

has a family income of less than 250% of federal poverty level

Subsidize employment and training costs

Small Manufacturer Subsidized Training and Employment Program, (DOL), PA 11-1, OSS

Monthly grants subsidizing new employee training and compensation

Initial grants up to $2,500; grant amount phases out over six months

Business must hire a new employee

Training and compensation

Attachment 2: Business Tax Incentives

Credits Available to Businesses with Fewer than 100 Employees

Name and CGS

Applicable Business Taxes

Eligibility

Incentive Amount

Rehabilitation of Historic Business Property for Mixed Residential and Commercial Use (CGS 10-416b, as amended by PA 11-48), Commission on Culture and Tourism

(http://www.cultureandtourism.org/cct/cwp/view.asp?a=2127&q=430786)

Insurance Premium

Corporation

Air Carrier

Railroad Company

Community Antenna

Utility Companies

Certified historic commercial, industrial, mixed residential and nonresidential, cultural, and former municipal, state, and federal property on the national or state Register of Historic Places or located in an historic district on the national or state register

Total credits capped at $50 million per three-year cycle, beginning with FY 09-12

25% of qualified rehabilitation expenditures; 30% if project includes units affordable to low- and moderate-income people

No project can receive more than $5 million 10% of the three-year limit.

Unused credits may be carried forward for up to five years

Manufacturing and Specified Service Facilities in Enterprise Zones, Enterprise Zone Municipalities, or Designate Airport Development Zones (CGS 12-217e (a), as amended by PA 11-1, OSS), DECD and the Connecticut Airport Authority (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Corporation

Based on developing facilities and creating jobs

Facility must be:

newly acquired, constructed or improved

located in the enterprise zone or in another part of the town with the zone

used for manufacturing or specified financial services

Business must have created jobs to do work in the facility

10-year credit against tax allocable to facility:

25% credit or

50% if at least 150 or 30% of new jobs are held by zone or city residents who qualify for federal job training assistance

Credits automatic in zones; available to manufacturers outside the zone at state's discretion

Specified service firms outside the zones qualify for credits under the program below

Service Facilities in Enterprise Zone Municipalities (CGS 12-217e (b)), DECD

http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Corporation

Based on developing facilities and creating jobs

10-year credit based on number of jobs created:

15%, 300-599 jobs

20%, 600-899 jobs

25%, 900-1,199 jobs

30%, 1,200-1,499 jobs

40%, 1,500-1,999 jobs

50%, 2000 or more jobs

Apprenticeship Training (CGS 12-217g), Department of Labor (DOL)

(http://www.ctdol.state.ct.us/progsupt/appren/appren.htm)

Corporation

Hiring manufacturing, plastics, and construction apprentices participating in state-approved apprenticeship training programs

Businesses hiring plastics trade apprentices qualify if the number hired exceeds the average number of plastic apprentices hired during the prior five years

Maximum $4,800 or 50% of wages paid, whichever is less, for manufacturing and plastics trade apprentices

Maximum $4,000 or 50% of wages, whichever is less, for construction trade

Incremental Research and Development Expenditures (CGS 12-217j), Department of Revenue Services (DRS)

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Corporation

Businesses that increase their R&D expenditures over the prior year

20% of the amount spent on R&D over the prior year's spending

Research and Development Expenditures (CGS 12-217n), DECD

(http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460&ecdNav=|)

Corporation

Any business incurring R&D expenditures

Credit amount determined according to statutory two-step formula

Credits range from 1% for expenditures under $50 million to 6% for expenditures over $200 million

Only one-third of credit can be taken per year

Unused credits may be carried forward until fully taken

Research and Development Expenditures for Qualified Small Businesses (CGS 12-217n), DECD

(http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460&ecdNav=|)

Corporation

Businesses with gross incomes under $100 million

6% of total R&D expenditure

Only one-third of credit can be taken per year

Unused credits may be carried forward until fully taken

Machinery and Equipment (CGS 12-217o), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Corporation

Business must have increased the amount it spent for machinery and equipment used in Connecticut over the prior year's amount

Credit depends on the number of employees:

10% for businesses with 250 or fewer employees

5% for businesses with between 251 and 799 employees

Purchase of Electronic Data Processing Equipment (CGS 12-217t), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Unrelated Business Income of Nonprofit Corporations

Air Carrier

Railroad Company

Community Antenna

Utility Companies

Insurance Premium

Corporation

Businesses paying property taxes on computers, printers, peripheral computer equipment, bundled software, and similar equipment

Credit is 100% of property tax paid on electronic data processing equipment

Financial Institutions (CGS 12-217u, terminates December 31, 2013), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Corporation

Constructing minimum 900,000 square foot facility and maintaining specified job levels

Two-stage credits:

Maximum $120 million in credits over 1st 10 years:

30% for each year business maintains at least 1,200 new jobs or

40% credit for each year business maintains at least 1,600 new jobs

Maximum $145 million in credits over next five years: 25% for each year business maintains at least 3,000 new jobs

Fixed Capital Investments (CGS 12-217w), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Corporation

Property must:

Have four-year class life

Not be sold or transferred

Be held or used in Connecticut

5% of fixed capital costs incurred during income year

Human Capital Investments (CGS 12-217x), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Corporation

Eligible activities:

Job training

Work education

Child care subsidies

Day care facilities

Donations to colleges and universities for technology

5% of expenditure

Unused credits may be carried forward for up to five years

Hiring Incentive for Temporary Family Assistance Program Participants (CGS 12-217y), DOL

(http://www.ctdol.state.ct.us/weltowrk/EmplServices.htm)

Corporation

Business must hire people who work 30 hours per week and have received program benefits for at least nine months

$125 per employee for each full month worked

Unused credits may be carried forward for up to five years

Displaced Workers Hired by Electric Suppliers (CGS 12-217bb), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Corporation

Worker displaced because of electrical industry restructuring; does not include officer or director of electric company or generation entity

$1,500 per worker available in income year after worker completes first six months of full-time work with business claiming credit

Displaced Workers (CGS 12-217hh), DRS

(http://www.ct.gov/drs/cwp/view.asp?a=1510&q=419230)

Insurance Companies, Hospitals, and Medical Services

Corporation

Utility Companies

Any business hiring a worker who:

lost his previous job because of a restructuring resulting in at least 10 layoffs and

whose wages are at least 75% of his prior wages

$1,500 per displaced worker available in income year after worker completes first 12 months of full-time work with business claiming credit

Job Expansion Tax Credit (PA 11-1, OSS), DECD (available for employees hired between 1/1/12 and 1/1/14)

Insurance Premium

Corporation

Personal Income

Utility Companies

Businesses with 50 or fewer employees creating at least one new job; those with 51 to 100 employees must create five; and those with more than 100 employees must create 10.

Higher amounts for hiring Connecticut residents that are:

Receiving unemployment compensation,

Unemployed after exhausting unemployment benefits,

Current or past U.S. Armed Forces members, or

Receiving services from DSS' Bureau of Rehabilitative Services

Three-year credit equal to $500 per new employee or $900 if the employee meets specified criteria

New Job Creation (CGS 12-217ii, as amended by PA 11-140), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460) (available through 12/31/11)

Insurance Premium

Corporation

Utility Companies

Any business creating at least 10 new jobs

Total credits capped at $20 million per year

Five-year credit up to 60% of the income tax deducted and withheld from the new employees' wages

Qualified Small Business Job Creation Tax Credit (CGS 12-217nn, as amended by PA 11-6; (available until December 31, 2012), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Insurance Premium

Corporation

Personal Income

Business with fewer than 50 full-time, Connecticut-based employees

Three-year credit per new full-time job held by Connecticut resident

Maximum $200 per month per employee credit

Vocational Rehabilitation Job Creation Tax Credit (CGS 12-217oo, as amended by PA 11-6; available unit December 31, 2012), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Same as above

Same as above

Same as above

Urban and Industrial Sites Reinvestment (CGS 32-9t), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Insurance Premium

Corporation

Air Carriers

Railroad Company

Community Antenna

Utility Companies

Other specified business taxes

Business investing in projects developing or redeveloping property, including brownfields, that meet statutory criteria, including generating new tax revenue and other economic benefits

Business may invest the funds directly in a project or through a fund manager

Total credits available for all projects capped at $500 million

100% credit, up to $100 million, spread out over 10 years: 0% in first three years after the investment was made, 10% per year in the next four years, and

20% per year in the remaining three years

Unused credits may be carried forward for up to five years or assigned to another taxpayer

Research and Development Expenditures for Enterprise Zone Businesses (CGS 12-217n), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Corporation

Any business headquartered in an enterprise zone employing over 2,500 people and with annual revenues over $3 billion

The greater of 3.5% of total R&D expenditure or the amount derived from the statutory two-step formula used by big businesses outside the zone

Corporations Created in Enterprise Zones (CGS 12-217v), DECD (http://www.ct.gov/ecd/cwp/view.asp?a=1097&q=437460)

Corporation

Corporation must be created in a zone and meet one of these hiring goals:

Hire at least 375 employees, at least 40% of whom reside in the zone and qualify for federal job training assistance or

Hire at least 375 employees, at least 150 of whom reside in the zone or qualify for federal job training benefits

10-year credit:

100% for the first three years

50% for the next seven years

Manufacturing Reinvestment Account (DECD), PA 11-140, as amended by PA 11-1, OSS

Corporation

Up to 100 small manufacturers (50 or fewer employees)

Up to five-year deferral of taxes on amounts up to $100,000 deposited in interest-bearing bank account.

Withdrawal permitted for worker training and capital expenses.

During five-year period, withdrawals subject to 3.5% tax rate; balance remaining after five years taxed at full rate plus 10% surcharge

JR:ro