Incentives
I. Tax Incentives.
A. The Illinois EDGE Program.
B. Gateway Commerce Center, Riverbend and Southwestern Madison County Enterprise Zones.
C. Illinois Tax Increment Financing Program (TIF).
D. Foreign Trade Zone #31.
E. Illinois Replacement Tax Investment Credit Program.
F. Illinois Property Tax Abatement Program.
G. Illinois High Impact Business.
H. Sales/Use Tax Incentives.
I. Manufacturers' Purchase Credits.
J. Training Expense and Research and Development Tax Credits.II. Business Financing.
A. Southwestern Illinois Development Authority (SWIDA).
B. Madison and St. Clair Counties' Economic DevelopmentLoan Program.
C. U.S. Department of Agriculture Rural Development's Business and Industrial Loan Program.
D. Illinois Development Finance Authority's Loan (IDFA)Programs.
E. St. Louis Metropolitan Loan Program.
F. Illinois Department of Commerce and Community Affairs (DCCA) Small Business Development Loan Programs.
G. SBA 7(a) Loan Program.
H. SBA 504 Loan Program.III. Infrastructure Support.
A. Madison County's Infrastructure Loan Program.
B. Illinois Business Development Public Infrastructure Program.
C. Southwestern Illinois Development Authority (SWIDA).
D. Illinois Department of Transportation's (IDOT) Economic Development Interchange and Access Road Program.
E. Illinois Department of Transportation's Rail Freight Program.IV. Employment and Recruitment Programs.
A. Illinois Industrial Training Program.
B. Prairie State 2000 Authority.
C. Job Training Partnership Act.
D. Illinois Employment and Training One Stop Centers.V. Technical Assistance Programs.
A. Site Location Assistance.
B. Small Business Development Centers.
C. International Trade Centers.The Leadership Council Southwestern Illinois is ready to serve you as an objective, third-party resource in your site selection effort. You can rely on the Leadership Council to provide objective, unbiased information about the market in Southwestern Illinois. If you choose, we also will coordinate with state, county or local governements. The Leadership Council Southwestern Illinois does not financially benefit directly or indirectly from any transaction to which we are a party, and there are no fees associated with our services. The information in this section was provided to the Leadership Council Southwestern Illinois from government sources and is accurate to the best of our knowledge.
Southwestern Illinois and the State of Illinois offer a wide range of programs to help businesses cost-effectively locate and expand their operations within the region. These programs are designed to provide assistance in the form of tax incentives, business financing, infrastructure development, employee recruitment and training, and general technical assistance such as confidential site location services.
A network of economic development assistance organizations, staffed by experienced professionals at the state, regional, and local level, are linked together in Southwestern Illinois to provide optimum assistance to businesses interested in development or expansion in the region. This network is ready to utilize all available resources to confidentially develop a comprehensive incentive proposal that will enable a business to cost-effectively locate and operate its facility in Southwestern Illinois.
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I. TAX INCENTIVES
A. The Illinois EDGE Program.
The Illinois Edge Program is a targeted tax incentive program that provides tax credits for businesses that create and/or retain jobs and make capital investments in Illinois. Businesses creating and/or retaining jobs may claim a state income tax credit equal to a portion of the total incremental income tax generated from jobs created and/or retained in Illinois. This new incentive is designed to help the state of Illinois compete with other states for large job creation or retention projects.
Type of Credits: Illinois EDGE credits are: (1) calculated from the personal income tax collected on salaries paid for the created and/or retained jobs; and (2) taken as a non-refundable tax credit against corporate income taxes assessed over a period not to exceed 10 taxable years. (These tax credits can be carried forward for five years).
Project Determination: Responsibility for determining project assistance is as follows: (1) A new Business Investment Committee of the Illinois Economic Development Board (IEDB) will determine types of projects to be assisted through the Illinois EDGE program; and (2) the Illinois Department of Commerce and Community Affairs (DCCA) will review prospective projects based on a written application submitted by the interested business.
Business Eligibility: EDGE is available to businesses newly locating or expanding in any county in Illinois. (In-state relocation may be eligible under special circumstances as determined by the IEDB and DCCA). Manufacturing, tourism or interstate services (excluding retail and professional services) may apply. To be eligible, firms must add an overall positive impact to the Illinois economy.
Project Eligibility: Businesses must invest at least $5 million in capital improvements and create a minimum of 25 jobs or they must invest in capital expenditures at a level specified by DCCA, create a specified number of jobs and provide a substantial economic benefit to the State as determined by DCCA. Businesses must also certify that the award of the credit is subject to their compliance with all legal and other requirements including the taxpayer's execution of a Tax Credit Agreement acceptable to DCCA.
Proof of Competitive Need: Interested applicants must demonstrate that: (1) the project is economically sound and increases employment opportunities in Illinois; and (2) that “but for” the inducement, the project would not occur in Illinois.
Proof of Cost Differential: Interested applicants must demonstrate that: (1) a cost differential or incentive differential exists in relation to a competing state location; and (2) the project provides an overall positive fiscal impact to Illinois.
Limits on the Tax Credits: Credits can not: (1) exceed the corporate income tax of the business (credits can be carried forward for 5 years); (2) exceed the personal income tax collected on salaries paid for the newly hired and/or retained jobs; and (3) exceed costs incurred by the applicant for its project.
Business Guarantees: To keep the tax benefits, businesses must: (1) maintain their operations in place in Illinois during the entire term of the Tax Credit Agreement; and (2) maintain the investment and the jobs outlined in the Tax Credit Agreement. Back to the Top
B. Gateway Commerce Center, Riverbend and Southwestern Madison County Enterprise Zones.
The Gateway Commerce Center, Riverbend and the Southwestern Madison County Enterprise Zones are specific areas that have been designated by the State of Illinois, Madison County, and participating municipalities to provide special tax incentives to encourage businesses to locate, expand, and retain their operations within the enterprise zones. The Gateway Commerce Center Enterprise Zone, which was designated through the assistance of the Southwestern Illinois Development Authority (SWIDA), is comprised of portions of the city of Edwardsville, village of Pontoon Beach and unincorporated Madison County. The Riverbend Enterprise Zone is comprised of portions of the cities of Alton, Bethalto, East Alton, Hartford, Wood River, Roxana, South Roxana, and parts of unincorporated Madison County. The Southwestern Madison County Enterprise Zone is comprised of portions of Granite City, Madison, Venice, and parts of unincorporated Madison County. The following incentives are available within the enterprise zones.
Property Tax Abatement: Property owners that improve or renovate industrial, commercial, or manufacturing property within the zones (and not within Tax Increment Financing Districts) are eligible to receive property tax abatement on the assessed value of the improvements. To receive this abatement, property owners must obtain a building permit and complete a Project Information Form describing the project.
Sales Tax Exemption: A 6.5 percent State sales tax exemption for building materials used to improve or renovate real property within the Enterprise Zones is available to individuals or businesses that purchase their building materials from retailers or suppliers located within the participating local governments comprising a Zone. To receive this sales tax exemption, the individual or business must provide the participating local supplier with a form called a "Purchaser Statement" that identifies their renovation or improvement project as being within the Enterprise Zone.
Enterprise Zone Machinery and Equipment Exemption: A 6.25 percent state sales tax exemption is available for purchases of tangible personal property to be used or consumed in the manufacturing or assembly process or in the operation of a pollution control facility within an enterprise zone. Eligibility for this exemption is contingent upon a business making a $5 million investment which causes the creation of 200 full-time equivalent jobs in Illinois, an investment of $40 million for the retention of 2,000 full-time jobs in Illinois, or an investment of $40 million and retaining 90 percent of the present jobs. The majority of the jobs created or retained must be located in the enterprise zone in which the investment occurs. A business must complete an application and be certified by the Illinois Department of Commerce and Community Affairs (DCCA) to be eligible for this incentive.
This sales tax exemption is applicable to the following:
(a) Hand tools used to maintain, repair, or operate machinery and equipment;
(b) Abrasives, acids, polishing compounds, or lubricants used or consumed in the manufacturing or assembly process;
(c) Coolants, adhesives, solvents, or cleaning compounds used to maintain, repair, or operate machinery and equipment;
(d) Manufacturing fuels;
(e) Protective clothing and safety equipment; and
(f) Fuels, chemicals, and catalysts used in the operation of pollution control facilities.
Utility Tax Exemption: A state utility tax exemption on gas, electricity, and the Illinois Commerce Commission's administrative charge is available to businesses located in enterprise zones. Eligibility for this exemption is contingent upon a business making a $5 million investment which causes the creation of 200 full-time equivalent jobs in Illinois or an investment of $20 million for the retention of 1,000 full-time jobs in Illinois. The majority of the jobs created or retained must be located in the enterprise zone in which the investment occurs.
A business must complete an application to and be certified by DCCA to be eligible for the state utility tax exemption.
Investment Tax Credit: A state investment tax credit of .5 percent is allowed to a taxpayer that invests in qualified property in an enterprise zone. Qualified property includes machinery, equipment, and buildings. The credit may be carried forward for up to five years. This credit is in addition to the regular .5 percent investment tax credit that is available throughout the state as well as a .5 percent credit for taxpayers who increase their employment in Illinois by one percent over the preceding year.
Divided Subtraction: Individuals, corporations, trusts, and estates can deduct from their taxable earnings an amount equal to the dividends paid by a corporation that conducts substantially all of its operations in an enterprise zone.
Job Tax Credit: Employers that operate businesses within the enterprise zone and expand their operations to hire at least five additional "economically disadvantaged or dislocated workers" are eligible to receive a $500 State tax credit for each eligible employee that they hire to work within the enterprise zone.
Interest Deductions on Loans: Financial institutions may deduct from their State income tax an amount equal to the interest received from a loan for development in an enterprise zone. The loan must be secured by "qualified property" in an enterprise zone, and the business must be receiving an investment tax credit.
Enterprise Zone Financing Program: Businesses located within enterprise zones may apply for Illinois Department of Commerce and Community Affairs (DCCA) participation loans to fund their new projects. Participation loans for 25% of a business's project costs up to $750,000 are available at either fixed or variable rates that are priced 200 basis points below the Wall Street Journal Prime rate. DCCA will allow the participating financial institution to retain 50 basis points to cover the costs of servicing the loan or it may elect to pass along the 50 basis points to the borrower. DCCA's term shall match that of the participating bank, but in no event shall DCCA funds be amortized longer than 10 years unless there is a balloon payment provision. Ineligible uses of funds are debt refinancing and contingency funding. Eligible businesses include any for profit entity with less than 500 employees (or not dominant in its field) locating or expanding in an Enterprise Zone. There are no industry restrictions or job creation/retention requirements under this program. Participating financial institutions must enter into a Master Participation Agreement, which outlines all terms, and conditions of any loan participation between the financial institution and DCCA.
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C. Illinois Tax Increment Financing Program (TIF).
Tax increment financing (TIF) is a planning and financing technique used by Illinois municipalities, including a number of Southwestern Illinois municipalities, to carry out development activities on a local basis. This program allows a municipality to acquire and prepare property for development and make needed public improvements. TIF districts allow a municipality to capture the increase or growth in local property taxes resulting from a redevelopment project. This property tax increase or growth (the "tax increment") is captured and used by the municipality to help pay for the public costs associated with the redevelopment project.Through TIF districts, the assessed valuation of real estate within a "blighted", "conservation" or "industrial park" project area is frozen. This base amount (taxes that are normally levied on real estate) continues to be disbursed to the taxing bodies serving the TIF area (e.g. county government, school district, and township). However, the growth in property tax revenues generated in the TIF, over and above the base amount, is diverted to a special tax allocation fund established by the municipality. The municipality can utilize the TIF funds for: demolition or rehabilitation of existing buildings; clearing and grading of land; construction costs of public infrastructure improvements and capital costs; bond financing costs incurred by the municipality; interest costs incurred by a redeveloper; planning, architectural, engineering, legal and other services; training costs of a business' employees within the redevelopment area; property assembly costs and occupant relocation costs; and staffing costs to implement and administer the redevelopment plan.
The municipality can continue to divert the tax increment until all costs related to the redevelopment project are paid, or for 23 years, whichever comes first. The municipality can use the tax increment revenue to pay for eligible project costs on a pay-as-received basis or to provide a basis for issuing tax-exempt bonds to pay for the costs.
Tax increment financing is locally initiated and administered. No Federal approval is required. Local units of government must: determine that the proposed TIF area is either "blighted", a "conservation area," or an "industrial park conservation area;" develop a redevelopment plan for the area; structure a related financing plan for the redevelopment activities; conduct a public hearing on the proposed TIF designation of the area; establish a joint review board comprised of the various taxing bodies; formally enact an ordinance designating the redevelopment project area; approve a redevelopment plan and project; and adopt tax increment financing. Back to the Top
D. Foreign Trade Zone #31.
The Tri-City Regional Port District located at Granite City, Illinois is the grantee and license holder for General Purpose Foreign Trade Zone #31. Foreign Trade Zones are sites within the United States where foreign and domestic merchandise is generally considered to be in international commerce. Foreign or domestic merchandise may enter this enclave without a formal customs entry or the payment of custom duties or government excise taxes. Merchandise entering a zone may be: stored; tested; sampled; labeled; repackaged; displayed; repaired; manipulated; mixed; cleaned; assembled; manufactured; salvaged; destroyed or processed.If the final product is exported from the USA, no U.S. Customs duty or excise tax is levied. If, however, the final product is imported into the U.S., Custom duty and excise taxes are due only at the time of transfer from the Foreign Trade Zone and formal entry into the U.S. The duty paid is the lower of that applicable to the product itself or its component parts. Thus, foreign trade zones provide opportunities to realize customs duty savings. In addition, foreign trade zone procedures provide one of the most flexible methods of handling domestic and imported merchandise.
Manufacturing businesses use foreign trade zones to maintain the cost competitiveness of their U.S. based operations, as compared with their foreign based competitors. For a business, Foreign Trade Zone status provides an opportunity to reduce certain operating costs associated with a U.S. operation that are avoided when operating from a foreign site. Should a business determine that Foreign Trade Zone designation would assist its location and operation in Southwestern Illinois, the Tri-City Regional Port District will work with the company to facilitate its use of the Foreign Trade Zone.
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E. Illinois Replacement Tax Investment Credit Program.
Firms in Illinois can receive an investment tax credit against Illinois Personal Property Replacement Income Tax for the purchase of qualified property, (including buildings and equipment) used in manufacturing, mining or retail businesses. The tax credit is equal to one-half of one percent (0.5 percent) of the adjusted basis of tangible new or used property with a useful life of four years or more.An additional 0.5 percent tax credit is available for any year in which the firm's base employment increases by one percent or more over the preceding year. If the increased employment is less than one percent, the additional credit will be reduced proportionately.
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F. Illinois Property Tax Abatement Program.
Any industrial or commercial firm may receive up to $3 million per project through an abatement of all or part of property taxes to any Illinois taxing district for up to ten years if it meets one of the following conditions and the local taxing district determines that it wants to provide the abatement: 1. The firm located within the taxing district during the preceding calendar year from out of state or from another country;
2. The firm was newly created in Illinois during the past year and proposes to, or has located an industrial or commercial operation in the taxing district; or
3. The firm expands a previously existing facility in the taxing district.
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G. Illinois High Impact Business Program.
The "Illinois Enterprise Zone Act" authorizes the Department of Commerce and Community Affairs to designate qualified businesses located outside of Enterprise Zones as "High Impact Businesses." The "Illinois Income Tax Act," "Retailers' Occupation Tax Act," and the "Public Utilities Act" make the High Impact Business eligible for an investment tax credit, an exemption from state utility taxes and a state sales tax exemption on the purchases of tangible personal property to be used or consumed in the manufacturing or assembly process or in the operation of a pollution control facility.A designated High Impact Business located in a foreign trade zone or sub-zone is eligible for additional incentives including sales tax exemptions on building materials, an income tax credit for the creation of a minimum of five eligible jobs, an exemption from municipal tax on utilities, and an income tax deduction for financial institutions receiving interest from loans secured by property eligible for the High Impact Business Investment Tax Credit.
The designation as a High Impact Business is contingent on the business undertaking a "large- scale investment and development project." The project must be the result of a minimum of a $12 million investment causing the creation of 500 full-time-equivalent jobs or an investment of $30 million causing the retention of 1,500 full-time jobs. The investment must take place at a designated location in Illinois in which the High Impact Business is located.
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H. Sales/Use Tax Exemptions
Illinois provides the following major exemptions from sales/use taxes: (1) manufacturing machinery, as well as replacement parts and computers used to control manufacturing machinery; (2) farm machinery; and (3) pollution control facilitiesñ any system, devices or appliance sold to prevent or reduce air and water pollution or pre-treat a potential pollutant.
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I. Manufacturers' Purchase Credits
In addition to being exempt from the sales tax in Illinois, purchasers of manufacturing machinery receive a credit equal to 25 percent of what the taxes would have been if the manufacturing machinery was taxable. Manufacturers may use this credit to offset any other sales tax liability they would otherwise have to pay in the ordinary course of business.
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J. Training Expense and Research and Development Tax Credits
Illinois allows a credit of 1.6 percent for training expenses. These expenses include educational or vocational training in semi-technical, technical, semi-skilled and skilled fields if those amounts were deducted from gross income in the computation of taxable income. Taxpayers must incur these expenses while training employees working in the state, or Illinois residents working outside the state.Corporate taxpayers may also take a 6.5 percent credit against corporate income taxes for qualified expenditures that are used for increasing research activities in Illinois.
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II. BUSINESS FINANCING
Listed below are a sample of the business financing programs which Southwestern Illinois and the State of Illinois could utilize to work with a business to enable it to cost-effectively locate and expand its operations within the region. These programs can potentially be blended together with private funding to finance the company's proposed project. Each program described below is available throughout the entire Southwestern Illinois.
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A. Southwestern Illinois Development Authority (SWIDA).
SWIDA was created by action of the Illinois General Assembly and the Governor in 1987. Tax-Exempt revenue bonds are available through SWIDA but are limited by federal law to selected purposes including not-for-profit organization objectives, pollution control, solid waste facilities, transportation and small issue manufacturing companies. Interest on tax-exempt bonds is exempt from federal income tax, and therefore attract a much lower rate than conventional financing.SWIDA can also issue taxable revenue bonds for commercial, industrial, and recreational projects that are not eligible for tax-exempt financing. Taxable bond rates generally run two to two and one-half points higher than tax-exempts. Proceeds can be used to purchase land, buildings and equipment, and to construct new or renovate existing facilities. Taxable bonds provide the ability to borrow money for a longer term and at a lower rate of interest than alternative forms of taxable financing.
The issuance of revenue bonds through SWIDA provides the following benefits: (1) The advantage of longer and more flexible debt repayment periods and lower interest rates than conventional financing; (2) A moral obligation commitment of the State of Illinois (optional); (3) The availability of unlimited dollar amounts for project activities with no fixed minimum job creation or capital investment requirements; and (4) All SWIDA bonds are exempt from state taxation.
SWIDA also administers the Southwestern Illinois Community Development Corporation (SWICDC) which was created to provide "gap" financing at market rates to small businesses when conventional lenders are unwilling to assume 100 percent of the risk of financing or when the small business's project does not meet the requirements of Madison or St. Clair Counties' Job Creation Loan Programs. The SWICDC concentrates on small to medium sized businesses that require capital for modernization, physical rehabilitation of their facilities or cash flow to make them more economically viable. The SWICDC will make loans between $50,000 and $500,000 but will not be the primary lender. A private financial institution must lend a majority of the necessary funds and must sponsor the SWICDC loan application.
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B. Madison and St. Clair Counties' Economic Development Loan Programs
Madison and St. Clair Counties' Economic Development Loan Programs provide direct financing to businesses at a below-market interest rate in cooperation with private sector lenders. The purpose of the programs is to provide "gap" financing to expanding or new firms whose projects create permanent jobs for existing qualified low or moderate income individuals within Southwestern Illinois.Under the Loan Programs, loans are typically made in the amount of $100,000 or between 10-25-49 percent of the business' total project costs, whichever is less (in special cases where there is substantial job creation, a larger loan amount may be allowed contingent on County Board approval). The loan funds are normally provided at a rate of 3-5 percent interest for a term of five to seven years. The remaining 51-90 percent of the total project costs must be provided by the business' participating lending institutions and its equity investment.
The program's loan funds can be used for: (1) Acquisition of real estate (land or buildings);
(2) Construction, renovation and rehabilitation improvements;
(3) Purchase or installation of machinery and equipment; and
(4) Working capital.
The Loan Programs' highest priority is to create jobs. Businesses that receive a low interest loan are expected to create at least one full-time equivalent job for an existing low or moderate income individual for every $10,000 of loan funds provided to the company.
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C. U.S. Department of Agriculture Rural Development's Business and Industrial Loan Program.
The Business and Industrial Loan Program is designed to assist eligible public and private organizations in rural areas to obtain quality loans for the purpose of improving, developing, or financing business, industry, and employment, as well as improving the economic climate in rural communities. Specifically, the program provides Rural Development's guaranties on loans to businesses in rural areas. Guaranties normally cover up to 80 percent of the principal advanced and are limited to a maximum of $10 million. The guaranteed loan funds may be used for the following: finance business and industrial acquisition, construction, conversion, enlargement, repair, modernization, and development costs; purchase and development of land, easements, right-of-way, buildings, facilities, leases, and materials; purchase equipment, leasehold improvements, machinery, and supplies; pollution control and abatement; and working capital.
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D. Illinois Development Finance Authority's Loan Programs.
The Illinois Development Finance Authority (IDFA) is a self-supporting state agency created to stimulate economic development and provide jobs for Illinois residents. Their loan programs include their revenue bond financing and participation lending programs.IDFA Taxable and Tax Exempt Revenue Bonds: IDFA is empowered to issue both tax exempt and taxable bonds as is SWIDA. Please see Section A. for a description of taxable and tax- exempt revenue bonds.
IDFA Participation Lending Program: IDFA established this program to assist banks in lending to Illinois businesses that create or retain jobs but may be unable to obtain sufficient financing through conventional sources. Through this program, IDFA will purchase up to the lessor of $300,000 or 50 percent participation directly from the bank. Participation loans can finance the purchase of land and buildings, construction and renovation of buildings and the acquisition of machinery and equipment. Interest rates will be 150 basis points below the rate charged to the borrower by the bank, resulting in a lower blended rate on the loan. If the loan carries an
SBA 7(a) guarantee, an additional 50 basis points may be subtracted from the bank lending rate. If the maturity of the bank's loan exceeds 10 years, IDFA requires a balloon payment at the end of 10 years. Banks may retain 50 basis points as a servicing fee, but the remaining 100 basis points (or 150 basis points if it is a SBA 7(a) loan) must be passed on to the borrower.
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E. St. Louis Metropolitan Loan Program.
This loan program is a cooperative project of the counties of Madison, St. Clair, St. Louis, St. Charles, Jefferson, and Franklin and St. Louis City. This program provides direct, low-interest, "gap" financing to companies that have a desire to reduce their dependence on defense contracts and individuals who have been laid off as a result of defense cuts and want to start their own businesses. Loans are typically made for up to 30 percent of the business' project cost with the remaining funds provided by the business' participating lending institution and its equity investment. Businesses that receive a loan are, for every $35,000 of loan funds provided to it through this program, required to create or retain one job within two years. The program's funds can be used for equipment, working capital, and the purchase or construction of a building
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F. Illinois Department of Commerce and Community Affairs (DCCA) Small Business Development Loan Programs.
Participation Loan Programs: DCCA has designed these programs to encourage lenders (banks or development corporations) to make loans, which they would not normally make, to small businesses whose projects have the potential to create or retain substantial employment opportunities or modernize or improve the competitiveness of the borrowers. DCCA can participate in small business loans up to 25 percent of the total amount of a project, but not less than $10,000 or more than $750,000. Minority, Women and Disabled Participations may not exceed 50 percent of the project, subject to the maximum of $50,000. DCCA's participation in a Development Corporation Loan must be less than 50 percent of the Development Corporation's Loan (Please note that SWIDA's CDC is a Development Corporation) not to exceed 25 percent of the total project or the $750,000 maximum. Funds available through the programs can be used for a number of business activities including purchase and installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings, etc. Funds cannot be used for debt refinancing or contingency funding. The lender will set its rate and terms according to its normal lending guidelines and DCCA will establish its terms and interest rate to be paid on its participation, which may or may not be the same as the rate charged by the lender. DCCA will, if necessary subordinate its lien position in the event of default to the primary financing institution but typically will not accept less than a second lien position.Enterprise Zone Financing Program: Businesses located within an Enterprise Zone may apply for Illinois Department of Commerce and Community Affairs (DCCA) participation loans to fund their new projects. Participation loans for 25 percent of a business' project costs up to $750,000 are available at either fixed or variable rates that are priced 200 basis points below the Wall Street Journal Prime rate. DCCA will allow the participating financial institution to retain 50 basis points to cover the costs of servicing the loan or it may elect to pass along the 50 basis points to the borrower. DCCA's term shall match that of the participating bank, but in no event shall DCCA funds be amortized longer than 10 years unless there is a balloon payment provision. Ineligible uses of funds are debt refinancing and contingency funding. Eligible businesses include any for profit entity with less than 500 employees (or not dominant in its field) locating or expanding in an Enterprise Zone. There are no industry restrictions or job creation/retention requirements under this program. Participating financial institutions must enter into a Master Participation Agreement which outlines all terms and conditions of any loan participation between the financial institution and DCCA.
Capital Access Program: This program is designed to encourage lending institutions to make loans to businesses that do not qualify for conventional financing. CAP is based on a portfolio insurance concept where the borrower and DCCA each contribute a percentage of the loan amount into a reserve fund located at the lender's bank. This reserve fund enables the financial institution to make loans beyond its conventional risk threshold and is available to draw upon to recover losses on loans made under the program.
A CAP loan is a private market transaction between the lender and the borrower with all terms, fees, conditions, rates, collateral, etc., being determined by the lending bank. The borrower's non- refundable contribution to the reserve fund must be between 3 and 7 percent of the total loan amount. DCCA will provide a matching contribution. A 133 percent match to the borrower's contribution will be provided on the first $2,000,000 in CAP loans enrolled at the lender bank. A higher match will be provided to minority/woman/disabled owned businesses (150 percent). Loan proceeds can not be used for debt refinancing or for financing passive real estate ownership.
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G. SBA 7(a) Loan Program.
The United States' Small Business Administration 7(a) Loan Program is a guaranty loan program for small businesses. Through this program, the SBA guarantees a portion of a bank's loan to a small business. Loan proceeds can be used for a variety of business purposes including: working capital; inventory purchases; acquisition of machinery, furniture, fixtures and equipment; construction or remodeling of buildings; the acquisition of real estate; and in certain instances the refinancing of existing debt. Loan terms typically range from 7 to 25 years at market rates.
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H. SBA 504 Loan Program.
Typically, small businesses encounter difficulties when looking for long-term financing at fixed interest rates. Recognizing this, the SBA created the 504 loan program which offers small businesses a financing alternative. In Illinois, the Small Business Growth Corporation administers the 504 program. Generally, any small business project that involves the purchase, construction or improvement of fixed assets is eligible. Each 504 loan package has the following 3 elements: (1) The Small Business Growth Corporation lends up to 40 percent of the total fixed asset financing need, to a maximum of $750,000-$1,000,000; (2) a private lender, usually a bank, lends up to 50 percent of the project's total cost; and (3) the business provides a minimum of 10 percent of the necessary funds. The interest rate on the Small Business Growth Corporation's loan is fixed and generally a little above the rate of long-term Treasury Bonds. The loan maturity is 10 or 20 years. The interest rate on the companion bank is negotiated by the borrower and typically is floating. This combination of fixed and floating interest rate financing provides an effective hedge against unfavorable interest rate fluctuation. For every $35,000 that the Small Business Growth Corporation lends, reasonable projections should indicate that one full-time equivalent job will be created or retained over the next two years. For collateral, the Small Business Growth Corporation generally requires a second lien subordinate to the participating bank on assets acquired with loan proceeds and personal guarantees.
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III. INFRASTRUCTURE
A. Madison County's Infrastructure Loan Program.
The Madison County Infrastructure Loan Program is designed to help Madison County's local governments finance public infrastructure needed to support private-sector economic development or address public health and safety concerns. Specifically, this program provides low-interest loans to local governments for infrastructure projects which: (1) lead directly to private sector investment activities that create or retain permanent jobs for Madison County residents; or (2) effectively address identifiable public health and safety issues in Madison County. The amount of funds that Madison County lends to a local government is based on the public benefits provided by the infrastructure project and the local government's needs and financial condition.This program can be used for the following types of public improvements: local roads and streets, access roads, bridges, sidewalks, water and sewer line extensions, water distribution facilities, rail improvements, gas and electric utility extensions, and the development or improvement of publicly owned industrial or commercial property.
Under this program, Madison County generally loans the funds to local governments at a 3 percent interest rate for terms between 5-10 years. The exact loan terms depend upon the fiscal capacity of the local government.
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B. Illinois Business Development Public Infrastructure Program.
The Illinois Business Development Public Infrastructure Program provides low interest loans and grants for public improvements to local governments on behalf of businesses with expansion or relocation projects that meet program criteria and that demonstrate the greatest potential in the creation and retention of jobs. The infrastructure improvements must be made on public property and must directly result in the creation or retention of private-sector jobs. Funds may be used for a wide variety of public infrastructure improvements including streets, access roads, water and sewer lines, and water and sewage treatment facilities.
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C. Southwestern Illinois Development Authority (SWIDA).
A local government financing program has been developed by SWIDA to assist local governments in the issuance of tax-exempt securities primarily for infrastructure or regulatory compliance purposes. Qualified local governments include counties, municipalities, and special purpose taxing districts whose objectives are to promote and enhance economic development within their communities. Bonds may be issued on both a pooled and a conduit basis.
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D. Illinois Department of Transportation's (IDOT) Economic Development Interchange and Access Road Program.
IDOT's economic development program makes funding available for highway improvements that will be a positive force in the location selection process of existing or new industrial and commercial development. Priority consideration for program funding to communities include: the need for the highway improvement and the imminence of development; ability to leverage State construction dollars through participation of other sources; and jobs created or retained in Illinois.
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E. Illinois Department of Transportation's Rail Freight Program.
The Rail Freight Program helps to preserve and create access to rail trackage necessary to maintain and expand industry in Illinois. IDOT provides funding to local governments, economic development groups, new and existing industries, agri-businesses, and railroad companies for rail-related projects. Specific project funding examples range from the construction of a rail spur to serve a local industrial park, to the rehabilitation of existing track to serve an existing industrial firm.
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IV. EMPLOYMENT AND RECRUITMENT PROGRAMS.
The State of Illinois and Southwestern Illinois have extensive experience in assisting the development of comprehensive training programs to meet the needs of businesses locating or expanding their operations within the State of Illinois. Many of these employment and recruitment programs have included a combination of the various training programs discussed below. Southwestern Illinois and the State of Illinois are committed to cooperatively working together to develop a comprehensive training package utilizing various training programs to encourage a business to locate its facility within the region.
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A. Illinois Industrial Training Program.
The primary purpose of the Illinois Industrial Training Program (ITP) is to provide training assistance to companies expanding or locating in Illinois, adding new product lines, or otherwise retooling or modernizing their facilities which results in the need to provide job training to new workers or to upgrade the skills of existing employees. This program is a state-funded job training program designed to assist new and existing businesses within the State of Illinois with the development of a new or existing workforce.A new firm locating in Illinois, or an existing firm undertaking a retention or expansion activity, can receive direct reimbursement for up to 50 percent of the total full-time employee training costs. The applicant company will be notified within a maximum of 30 days after submission of a completed Illinois Department of Commerce and Community Affairs (DCCA) application as to the extent of training assistance provided to the project. To accommodate employers' needs, the ITP is designed to enable employers to select and hire the employees to be trained, specify the appropriate job skill requirements, and identify training locations and techniques.
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B. Prairie State 2000 Authority.
The Prairie State 2000 Authority provides loans to Illinois-based companies for employer training programs. This program finances employee skill upgrading programs tied to technological changes in the workplace with the focus on the retention of existing jobs. Loans can be made for up to 100 percent of the training costs, with 25 percent forgiven after trainees remain employed with the company for one year following completion of training.
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C. Job Training Partnership Act (JTPA).
In Illinois, the Department of Commerce and Community Affairs (DCCA) administers the federal JTPA program. Through a statewide network of 26 service delivery areas, (including a service delivery area administered by Madison and St. Clair Counties' Employment and Training Departments) training programs are provided to economically disadvantaged youths and adults, and to eligible workers who are dislocated due to plant closings, layoffs, or technological changes in their occupations. These comprehensive training programs provide employees who are prescreened, responsible, motivated to succeed, and ready and willing to work. This program helps eliminate the need for costly advertising and the time spent searching through applications to find qualified candidates. Under this program, the employer still maintains the authority to accept or reject any candidate referred by the JTPA program. Other services provided include outreach, job counseling, vocational assessment, job search assistance, placement, on-the-job training, and follow-up services.
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D. Illinois Employment and Training One Stop Centers.
Illinois' Employment and Training One Stop Centers are innovative, customer driver systems designed to provide employment and training services to employers of all sizes, job seekers and students. These one-stop centers provide employers information on worker availability, current wage rates, and projected labor demand. They also offer specialized employer services such as staff recruitment for mass hiring, customized training and outplacement assistance for businesses. The One-Stop Centers are supported by the Illinois Department of Commerce and Community Affairs, Illinois Department of Employment Security and the JTPA program administered by Madison and St. Clair Counties' Employment and Training Department.
Back to the TopV. TECHNICAL ASSISTANCE PROGRAMS.
A. Site Location Assistance.
Southwestern Illinois offers a wide range of developed and readily accessible business, industrial and research parks. A network of economic development professionals from both the private and public sector provides facility locators with a full range of confidential site selection services. These include: business site and buildings inventories; complete demographic profiles by city, county, ZIP code, or market area; labor market data; private sector investment and growth trends; business incentive and assistance program delivery; state and local tax comparisons and other technical information that businesses may need in determining whether to retain, expand, or locate their operations in Southwestern Illinois.
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B. Small Business Development Centers.
Small Business Development Centers provide information and assistance to potential and existing small businesses through counseling and training sessions. Their services include: one-on-one business counseling and management assistance; assistance with the development of business plans; access to marketing information; help in identifying and applying for business financing; assistance with accounting, financial analysis and planning; and access to business education and training opportunities.
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C. International Trade Centers.
International Trade Centers provide information, counseling and training to existing, new-to-export Illinois companies interested in pursuing international trade opportunities. Their services include: individualized export assistance to Illinois manufacturers and those businesses new-to-export or new-to-market; access to international market research to evaluate key overseas opportunities; identification of potential foreign buyers, agents, and/or distributors through trade leads; information and training programs on export procedures, distribution, methods of payment and foreign business practices; an extensive collection of international trade reference materials; export finance assistance in coordination with private lenders and SBA's Export Working Capital and EXIM Bank programs; and access to DCCA's International Business Divisions.