City of Salem Revolving Loan
The City of Salem has direct low interest loans available through its Revolving Loan Fund. This fund has been set aside by the City in order to provide a source of gap financing for expansion efforts of local industry and new industries wishing to locate within community. These funds can be sued to fund construction, working capital, equipment, inventory and real estate. The loan may fund up to 30% of the total project cost or up to $15,000 per job to be created or retained at an interest rate equal to 50% of prime, with flexible loan terms.
City of Salem Tax increment Financing (TIF) District
Projects located within a TIF District may receive the benefits of TIF for up to 23 years. The increased (incremental) real estate taxes of a project can be used to: pay for purchase of land/buildings; pay for the cost of site preparation or public improvements; job training; and subsidizing the interest (30% subsidy) on funds borrowed by the private business.
Community Development Assistance Program (CDAP)
This federally funded program, administered by DCCA, assists smaller Illinois local governments in financing economic development needs. Grants are made to units of local government and may be loaned to businesses for projects that will create or retain jobs in the community. Additionally, local governments may expend these grant funds for public infrastructure improvements that directly support economic development activities. The program is limited to communities with populations under 50,000 that are not located within an entitlement city or one of the eight large urban counties that receive funds directly from the federal government. Funds are targeted toward projects that primarily benefit low to moderate-income people. The City of Salem has a local revolving loan fund generated by this
Industrial Training Program (ITP)
ITP awards grants to Illinois businesses to provide assistance to Illinois employers in training, retraining or upgrading the skills of existing or new workers. Companies may receive grant awards up to 50% of eligible training costs.
The availability of financial incentives permits Salem to compete with other communities in attracting and retaining existing businesses. Salem’s local incentives position the community to offer property tax abatement, infrastructure assistance, and low interest financing. Even within the State of Illinois, Salem enjoys an advantage over many other communities competing for business development. There are approximately 90 + Enterprise Zones within Illinois. Property tax abatement within an Enterprise Zone is a discretionary incentive determined by local taxing bodies. Salem benefits over non-Enterprise Zone communities by offering state and local incentives and also benefits over Enterprise Zone communities that do not offer property tax abatement. In addition, Salem can use
their RLF and TIF to encourage additional development.
The State of Illinois incentive package has improved greatly during the past four years. In fact, the State of Illinois received the 2001 Site Selection Magazine “Governor’s Cup Award” as the number one location for business development and growth. This designation is based on the number of new jobs created, total capital investment, total new and expanded facilities, and other key economic development measures.
The introduction of the EDGE program has leveled the playing field for Illinois and Illinois’ communities against neighboring states in providing tax credit enhancements for business development. The state incentives available as part of the Enterprise Zone have always been favorable when compared to other state enterprise zone programs. In addition, DCEO has made an increasing commitment to funding training for Illinois businesses and employees.
State of Illinois High Impact Business
The purpose of the “High Impact Business” is to provide tax incentives to promote large-scale investment and job creation or retention projects. The project must involve a minimum of $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 outside of an Enterprise Zone.
The High Impact Business benefits are similar to the Enterprise Zone incentives and include: a sales tax exemption on building materials, an investment tax credit, and exemption from state gas and electric tax, and a state sales tax exemption on manufacturing repair and equipment repairs and replacement parts.
In addition, a designated High Impact Business located in a foreign trade zone or sub-zone is eligible for additional incentives including an income tax credit for a minimum of five new eligible hires, an exemption from municipal tax on utilities, an exemption from the telecommunications excise tax, and an income tax deduction for financial institutions receiving interest from loans secured by property eligible for the High Impact Business Investment Tax Credit.
Economic Development for a Growing Economy (EDGE)
EDGE provides tax credits to qualifying businesses that create new jobs and make capital investments in Illinois. Credits are calculated from the personal income tax collected on salaries paid to employees in the new jobs created, which may be taken as a non-refundable tax credit against corporate income taxes over a period not to exceed 10 taxable years. To qualify, firms must make an investment of at least $5 million in capital improvements and create a minimum of 25 new jobs or make an investment of $2.5 million and create a minimum of 50 new jobs, although demonstrated public benefit may result in waiver of these requirements.
Large Business Development Program
The Illinois Large Business Development Program provides incentive financing or grants to encourage large out-of-state companies to locate facilities in Illinois and also to encourage existing Illinois companies to undertake major job expansion or retention projects within the state. Funds available through the program may be used by large businesses (500 or more employees) for typical business activities, including financing the purchase of land or buildings, construction or renovation. LBDP funds are targeted to major economic development opportunities that will result in substantial private investment and the creation and/or retention of 300 or more jobs.
Rural Business Initiative Loan Program (RBI)
The South Central Illinois Planning and Development Commission functions as an “intermediary lender” to provide flexible regional fixed asset and working capital assistance to credit worthy expanding or start-up industrial or commercial businesses. The program is used in conjunction with a combination of business equity and conventional lending sources without the normal cumbersome strings of public sector financing. A maximum of 75% of the total project cost or $250,000 (whichever is less) can be loaned under the RBI program with a competitive fixed interest rate of 5.5% based on $25,000 loaned per job created or retained.
Economic Development Administration (EDA) Title IX Revolving Loan Fund
Title IX is similar to the Rural Business Initiative Program except that the program is primarily used in conjunction with manufacturing, distribution or technology-based firms that have the ability to create higher-skilled, higher wage jobs for area residents. The Title IX loan program is used in conjunction with a combination of business equity and conventional lending or other public sector financing sources without the normal cumbersome strings of public sector financing. A maximum of 25% of the total project cost or $200,000 (whichever is less) can be loaned under the Title IX program based on $25,000 loaned per job created or retained.
Small Business Administration (SBA) 504 Certified Development Company Loan Program
This program is also available through the South Central Illinois Planning and Development Commission. The objective of the program is to assist small and medium-sized start-up and existing business in obtaining competitively priced, long-term, fixed-rate, subordinated financing for fixed asset needs often with a reasonably low equity injection for established profitable firms. Financing of up to $2.0 million, or a maximum of 40% of the project’s total cost, (whichever is less) may be obtained at fixed rates for either 10 or 20 years based on $65,000 per job created or retained. 504 financing for rural manufacturing borrowers of up to $4.0 million are possible based upon the creation or retention of one full time job for each $100,000 in 504 financing. For the balance of 2009, the normal 3.0% 504 processing fee
normally charged by SBA to borrower has been “waived” as part of the ARRA provisions.
Low Interest Loans – Community Development Corporation
The Jefferson, Marion and Washington County Community Development Corporation offers below market, low interest loans to qualifying businesses.