Financial assistance - Iowa Area Development Group

Iowa offers an array of financial assistance programs to aid businesses with their expansions. Listed below are the more frequently used programs, however the list is not exhaustive. Persons interested in Iowa's financial assistance programs should contact the IADG office to discuss the most appropriate program for the needs of your project.

(posted with permission by the Iowa Department of Economic Development)

Community Economic Betterment Account (CEBA)
Economic Development Set-Aside (EDSA)
Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP)
Enterprise Zones
New Jobs and Income Program (NJIP)
Tax Increment Financing (TIF)
0% Rural Economic Development Loan
Revolving Loan Funds

The CEBA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans. Projects eligible for CEBA funding include, but are not limited to, the following:

Building construction or reconstruction
Land or building acquisition
Equipment purchases
Operating and maintenance expenses
Site development - clearance, demolition and building removal
Working capital

CEBA investments should not be considered a sole funding source. The program leverages other financial support such as bank financing and private investment.

The CEBA program also contains a "Venture Project" component specifically designed for early-stage and start-up businesses. Financial assistance is provided in forms conducive to the company's stage of maturity. The "Venture Project" component allows for longer-term job creation and investment performance periods than otherwise offered through CEBA.

The CEBA program can provide assistance up to $1 million. As an alternative, non-traditional, short-term float loans or interim loans greater than $1 million may be available. The funding level for start-up companies varies depending upon employee wage rates. Assistance through CEBA's "Venture Project" component is provided as an "equity-like" investment, with a maximum award of $100,000.

The EDSA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans. Projects eligible for EDSA funding include, but are not limited to, the following:

Building construction or reconstruction
Land or building acquisition
Equipment purchases
Operating and maintenance expenses
Site development - clearance, demolition and building removal

Working Capital
EDSA investments should not be considered a sole funding source. The program leverages other financial support such as bank financing and private investment.

The EDSA program assistance is targeted toward business projects located in communities of under 50,000 population. At least 51 percent of the created/retained employment opportunities must be made available to individuals presently earning wages defined as low-and-moderate income. The EDSA program can provide assistance up to $500,000.

The Value-Added Agricultural Products and Processes Financial Assistance Program seeks to increase the innovative utilization of Iowa's agricultural commodities. It accomplishes this by investing in the development of new agri-products and new processing technologies.

VAAPFAP may assist projects in two primary categories and a third secondary category:

Innovative Products and Processes encourages the processing of agricultural commodities into higher-value products not commonly produced in Iowa, or utilizing a process not commonly used in Iowa to produce new and innovative products from agricultural commodities.
Renewable Fuels and Co-Products encourages the production of renewable fuels, such as soy diesel and ethanol, and co-products for livestock feed.
A third category, Project Creation Assistance, is also available for projects that may be ineligible under the regular program due to their "pre-commercial" status. Project Creation Assistance is limited to projects within certain designated Strategic Initiatives.

Program Eligibility Requirements:

The proposed project must be located in Iowa.
The business must have a business plan demonstrating a viable market, and managerial and technical experience.
The business should also have completed a feasibility study documenting the viability of the proposed start-up business.

Projects are also evaluated according to the following criteria:

The degree to which the facility will increase the utilization of agricultural commodities produced in the state.
New and innovative
Feasibility
The proportion of local match to be contributed to the project.
The level of need of the region where the existing facility is, or the proposed facility is to be located.
The degree to which the facility produces a co-product that is marketed in the same locality as the facility.

Any single project may apply for up to $525,000 in assistance. Financial assistance is provided in the form of loans and forgivable loans. Generally, assistance of $20,000 or more is usually awarded as a combination of loans and forgivable loans, with the forgivable portion decreasing as the award size increases.

Business locating or expanding in an Enterprise Zone may receive the following tax benefits:

A local property tax exemption on the value added to the property.
Additional funding for training new employees. If applicable, these funds would be in addition to those authorized under the Iowa New Jobs Training Program.
A refund of state sales, service, or use taxes paid to contractors or subcontractors during construction.
An investment tax credit of up to a maximum of 10% of the new investment in machinery and equipment, land, buildings, and improvements to existing buildings. This Iowa tax credit may be carried forward for up to seven years or until depleted.
An additional research and development tax credit of up to 6.5%, which may be refundable. This Iowa tax credit is based on increasing research activities within the state and is available while the business is participating in the program for up to 10 years.

To receive these benefits, businesses must:

The business must make a minimum capital investment of $500,000.
The business must create at least 10 full-time, project-related jobs and maintain them for at least 10 years.
The business provides all full-time employees with the option of choosing a standard medical and dental insurance plan of which the business pays 80% of the premiums or a monetarily equivalent benefit.
The business must pay an average wage that meets or exceeds 90% of the average county or regional wage, whichever is lower. (Check with the IDED for the community's current wage requirement.)
The business cannot be a retail establishment or a business whose entrance is limited by cover charge or membership.
The business cannot close or reduce its operation in one area of the state and relocate substantially the same operation in the Enterprise Zone.
The local Enterprise Zone Commission and the Iowa Department of Economic Development must approve the business' proposed project prior to project initiation.

The Iowa New Jobs and Income Program provides a package of tax credits and exemptions to businesses making a capital investment of at least $11,414,000 and creating 50 or more jobs meeting wage and benefit targets within five years.

Qualifying businesses participating in NJIP receive substantial benefits, including:

Local property tax exemptions for up to 20 years on the value added to the property.
Additional funding for training new employees. If applicable, these funds would be in addition to those authorized under the Iowa New Jobs Training Program.
Refunds of sales, services, or use taxes paid to contractors or subcontractors during construction.
An investment tax credit of up to 10% of the capital investment in machinery and equipment, land, buildings, and improvements to existing buildings. This Iowa tax credit may be carried forward for up to seven years until depleted.
An additional research and development tax credit of up to 6.5%, which may be refundable. This Iowa tax credit is based on increasing research activities within the state and is available while the business is participating in the program for up to 10 years.

A business is eligible for NJIP benefits if it:

Makes a capital investment of at least $11,414,000.
Create 50 new non-management, production jobs and maintain them for at least five years.
Pay a median starting wage of at least $11.96 per hour or 130% of the average county wage, whichever is higher.
Provide and pay at least 80% of the costs of a standard employee medical and dental insurance plan for all full-time employees.
Not close or significantly reduce operations elsewhere in Iowa in order to relocate the operation to the proposed community.
Not be a retail establishment.

Additionally, a participating company must meet at least three of the following criteria:

Offer a pension or profit-sharing plan.
Produce/manufacture value-added goods or services or belong to one of Iowa's "target" business segments:
- Value-added agricultural products
- Insurance, financial services or telecommunications
- Plastics
- Metals
- Printing, paper or packaging products
- Pharmaceuticals
- Software development
- Instruments, measuring devices and medical instruments
- Recycling and waste management
Make daycare services available.
Annually invest no less than one percent of the Iowa facility's pretax profits in research and development.
Have a productivity and safety improvement program in place.
Annually invest not less than one percent of Iowa facility's pretax profits in worker training and skills enhancement.
Occupy an existing vacant facility of at least 20,000 sq. ft.

In order to receive benefits, the business' application for benefits must receive final approval from the Iowa Department of Economic Development Board before project initiation.

CEBA Program Participation
A business that participates in NJIP is not eligible to receive financial assistance for the same project from the Community Economic Betterment Account (CEBA) program. However, the company may be eligible for other financial assistance programs.

Businesses interested in this program should consult the Iowa Department of Economic Development along with relevant local organizations to determine eligibility.

City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation caused by the construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. Tax Increment Financing may be used to offset the cost of public improvements and utilities that will serve the new private development, to finance direct grants or loans to a company, or to provide the local match for federal or state economic development assistance programs.

Unique financial assistance programs may apply to your business expansion.

The Rural Economic Development Loan Program was specifically designed to assist job creation projects in rural areas. Rural Electric Cooperatives can apply to this unique USDA program that allows for up to $450,000 in 0% interest financing to assist with your business expansion.

Maximum Loan Amount:	$450,000
Maximum Term:	10 years
Interest Rate:	0% Interest
Maximum Payment Deferment:	24 Months — Start ups 12 Months — Existing Businesses

Contact IADG for program and collateral requirements, qualifications and further details.

IADG members operate 31 individual revolving loan funds across Iowa providing a combined $15.8 million in alternative financing. These flexible financing tools offer low cost financing to assist with your expansion project. Contact IADG for funds availability, application and collateral requirements, and further details.