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   Incentives
The Martin Community Development can help businesses obtain several different incentives that are available, should the business be eligible for those incentives.

Here are links to the various incentives:

TENNESSEE FAST TRACK - INDUSTRIAL INFRASTRUCTURE PROGRAM
The Tennessee Department of Economic & Community Development has monies allocated to assist local governments in providing infrastructure to support new or expanding industries.

The Fast Track is used for the following types of activities:

  • Water Systems -- Source development, intake structures, treatment plants, storage tanks, transmission lines, and other improvements normally associated with the provision of public water service.
  • Wastewater Systems -- Collector lines, treatment plants, and other improvements normally associated with the provision of public wastewater service.
  • Transportation Systems -- Access roads, rail sidings, port facilities, airport improvements, and other improvements normally associated with the provision of public transportation service.
  • Site Improvements -- Leveling, grading, or drainage of real property in order to make it suitable for the location or expansion of business.
  • Other improvements to the physical infrastructure may be eligible if it can be demonstrated that the improvement are required to support economic growth.

Eligible Businesses
The following types of businesses are eligible for TIIP monies:

  • Manufacturing and other economic activities exporting more than half of their product or services outside Tennessee.
  • Businesses where more than half of their product or service enters into the production of exported products.
  • Uses, which primarily result in import substitution or replacement of, imported products or services with those produced in Tennessee.
  • Other economic activities may be supported by TIIP funds if they are determined to have a beneficial impact on the economy of Tennessee.
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COMMUNITY DEVELOPMENT BLOCK GRANTS (CDBG)

Small Cities Community Development Block Grants funds are available in Tennessee. These funds are awarded to new and expanding industrial manufacturing and distribution companies for infrastructure, building and capital equipment loans.

The maximum loan or grant any community/company can receive is $500,000. The amount of financing is negotiated with the company and is based on the location of the project.

Infrastructure grants are available for necessary infrastructure for new and expanding industries. The local community is required to match all grants for infrastructure. Grants must have direct public as well as private benefit.

Interest rates fluctuate as the prime rate fluctuates. The prime rate is established quarterly on the first day of the following months: January, April, July, and October. The base prime rate of the loan is determined by the quarter in which the loan is awarded. Once the base prime rate is established, it will be in effect for the life of the loan.

Applicants for start-up funding must have 20 percent equity and 30 percent of project financing must come from private sources.

Application

Companies applying for CDBG assistance must show that the loan is necessary and appropriate.

Application must show documentation of a company's need for assistance as well as public benefit factors for the assistance. Standard loan underwriting procedures are followed with CDBG's. A pre-application meeting is required for all economic development projects. Complete application should be submitted to Tennessee Department of Economic & Community Development's Program Management Division. Once the application is received, it is reviewed on a first come, first serve basis. Start-up project loans/grants usually take one month longer to review and make recommendations.

For CDBG funding, two federal requirements must be met. A federal environmental review is required with the loan or grant. No project costs can be incurred prior to the end of the environmental review period. During this time, no equipment can be ordered, no construction can begin and no dirt can be moved related to the project. Companies must also comply with the federal equal opportunity laws.

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PRIVATE ACTIVITY BONDS

While the Department of Economic & Community Development is responsible for the allocation of the state's volume limitation, or state cap, of private activity bond authority, private activity bonds are issued at the local level in Tennessee. Because of the intricacies of bond financing, potential users of private activity bonds should discuss their needs with a qualified bond counsel to determine when and under what conditions such financing may be used

Eligible Activities
Only uses of private activity bonds that are directly related to economic development are those included in the exempt. facilities category. These activities include:

  • Airports
  • Docks and Wharfs
  • Mass Commuting Facilities
  • Water, Sewer, Solid Waste, or Hazardous Waste Facilities
  • Electric Energy or Gas Facilities
  • Certain Heating or Cooling Facilities
  • Intercity Rail Transportation Facilities

Eligible Businesses
To maximize the beneficial use of the state's allocation of tax exempt private activity bond authority, a priority structure for funding is established.

Priority 1 businesses are as follows:

  • Manufacturing and other types of economic activities which export more than half of their product or service outside of Tennessee.
  • Products of which more than half of the output enters into -the production of exported products.
  • Uses that primarily result in import substitution or the replacement of imported products or services with those produced in Tennessee.
  • Other uses determined by the Commissioner of the Department of Economic and Community Development (ECD) to have a major impact on the economy of Tennessee.

Also eligible, but listed as Priority II are:

  • Uses that provide essential community services or which support Priority I uses.
  • Other uses determined by the Commissioner of the Department of Economic & Community Development to have a secondary impact on the economy of Tennessee.

Priority III businesses are as follows:

  • Other eligible uses of private activity bonds.

Funding
Monies are set aside for state projects that may require a share of the state cap. State projects are approved at the direction of the Commissioner of ECD. Each county area in the state has a target allocation of the state's bond authority that is equal to that county's percentage share of the total state population in effect January 1 of each year. Tennessee's cap is $247,650,000.

Application and Approval
Private activity bonds are approved based on two considerations: the credit worthiness of the company requesting the bond, and the county in which the bond will be used. The burden of bond purchase is the responsibility of the company interested in securing the bond. Applications for an allocation of this bond authority are made to the Tennessee Department of ECD by local bond boards.

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TENNESSEE VALLEY AUTHORITY ECONOMIC DEVELOPMENT LOAN FUND

The Economic Development Loan Fund is a multi-million dollar revolving loan program established to stimulate industrial development and leverage capital investment in the "VA power service area. "VA uses the fund to promote economic expansion, encourage job creation and foster the increased sale of electricity by TVA and its power distributors.

Loans are made for new industrial plants, plant expansions, plant retention, infrastructure development (such as speculative industrial buildings and industrial parks), and a limited number of other loans.

Loans are evaluated based upon a project's financial viability, management quality, community economic impact, funds leveraged, and increased power sales.

Each "VA dollar invested should leverage additional funding from other sources

Generally, a minimum of 1 job should be created or retained for every $5,000 invested by "VA. Maximum loan amounts vary according to type of project. No "VA loan is likely to exceed $2 million. "VA funds should be used for the acquisition of fixed assets. Real estate and equipment are acceptable collateral.

Loans are typically below market rate, with specific rates determined on a case-by-case basis after considering the loan evaluation criteria. Maximum length of terms is 10 years for new plants, plant expansion and plant retention loans, 7 years for service industry loans, and 5 years for infrastructure loans. Repayment schedules will be determined on a project-by-project basis.

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RURAL ELECTRIFICATION ADMINISTRATION (REA) RURAL ECONOMIC DEVELOPMENT LOAN PROGRAM

The Rural Electrification Administration revolving loan program is designed to promote rural economic development and job creation by providing zero interest loans to REA borrowers.

Eligible Activities
Rural economic development and job creation activities, funding for project feasibility studies, start-up costs, incubator projects, and other reasonable expenses for the purpose of fostering economic development are eligible for the REA loan program. No loans or grants shall be made for any projects of which any director, officer, or owner of the borrower. or close relative thereof is an owner or which would create a conflict of interest; provided, however, cooperative members are not to be considered owners of borrowers in this determination.

Eligible Businesses
Electric and telephone utilities on behalf of the job creating entity are eligible for REA revolving loans.

Funding
The program will fund up to $250,000 per project. The maximum term of the loan is ten years at zero interest rate with a two-year deferred payment.

Application and Approval
A preapplication may be filed during six (6) periods each year: February 1 - 14, April 1 - 14, June 1 - 14, August 1 - 14, October 1 - 14, and December 1 - 14. The selection and approval of applications for either loans and/or grants rests solely within the discretion of the REA Administrator. The REA must approve all agreements between the electric borrower and the project, including all grant, loan, and security agreements, loan notes and all subsequent revisions or amendments thereof.

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SMALL BUSINESS ADMINISTRATION 504 LOAN PROGRAM

The U.S. Small Business Administration's 504 Direct Loan Program is designed to stimulate job creation and to increase private sector involvement in the financing of long-term, fixed assets for small businesses. Through the pooling of projects, the SBA 504 Direct Loan Program allows the small business concern to take advantage of the open capital markets but avoid much of the costs associated with entry into these financial markets.

Eligible Activities
The following activities are eligible for funding: land, building, or machinery and equipment acquisition; building expansion or renovation; and new construction. Certain activities are ineligible for SBA 504 loans, including refinancing of existing debt, provision of working capital, and restructuring of existing debt.

Eligible Businesses
SBA 504 loans are available to for-profit corporations, partnerships or proprietorships whose net worth does not exceed $6 million and whose average profit after tax for the last two years doesn't exceed $2 million. Certain companies are ineligible for SBA 504 loans; they include passive investment companies, unregulated media forms, real estate investment companies, non- profit corporations and financial institutions.

Funding
Under the SBA loan program a company must be willing to commit to the creation of one job for each $35,000 of financing. SBA participation is limited to 40% of the total project cost, with a minimum investment of $50,000 and a maximum investment of $750,000. The 504 loan offers a 10 year or 20 year term, depending on the useful life of the assets financed. Interest rates for the SBA loan are determined from the SBA debenture sale; the 20-year treasury note is an indicator.

Costs associated with SBA 504 loans include:

  • A 3 percent financing fee plus attorney fees, not to exceed $2,500. This amount is financed into the debenture amount.
  • A service fee of .6 percent of the outstanding balance of the loan is included as a part of the effective interest rate.
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SMALL BUSINESS ADMINISTRATION 7A LOAN PROGRAM

The U.S. Small Business Loan Program is designed to provide the lender an additional tool for constructing a long-term package for the small business.

Eligible Activities
SBA 7A loans can be used for land, building, or machinery and equipment acquisition; receivable and inventory financing; debt refinancing; working capital or lines of credit; building expansion; and new construction.

Eligible Businesses
The following businesses are eligible for the SBA 7A program:

  • Retail and service businesses with annual receipts of less than $3.5 million.
  • Construction businesses with annual receipts of less than $7 million for special trade contractors, otherwise, construction businesses with less than $17 million in annual receipts.
  • Wholesale businesses with less than 100 employees.
  • Manufacturing operations classified as a small business with employment contingent on industry.

Funding
The maximum SBA guaranteed loan is $750,000. SBA will guarantee up to 90% of a loan less than $155,000 and no more than 85% of loans greater than $155,000. Loan limits are based on the type of loan as follows:

  • Working capital, inventory and debt refinancing loans are limited to seven (7) years.
  • Equipment loans are limited to ten (10) years.
  • Construction and acquisition of real property are limited to twenty-five (25) years.

Certain costs are associated with the SBA 7A program.

  • Loans exceeding 12 months are charged 2% of the amount guarantee.
  • Loans less than 12 months are charged 1/4 of 1 percent.
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