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| There
is a wide variety of financial resources and
funding programs available to businesses choosing
to relocate or expand in Gorham. Public and
private organizations provide financial assistance
to businesses ranging from the newly formed
to large-scale industry and corporations.
A few of the major organizations and programs
offering services include: |
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| Federal
Sources |
| U.S.
Small Business Administration (SBA) |
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| This
Federal organization provides several loan
programs to help finance small businesses
in Maine. Funds are made available through
intermediary organizations such as conventional
banks and Certified Development Corporations
(CDC). There are several major SBA financing
packages: |
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The
SBA-7a program is a bank loan guarantee
where SBA may guarantee 80% of loans up to
$100,000 and 75% of loans in excess of that
amount. Loans are used to finance both fixed
assets and working capital, but SBA cannot
guarantee more than $750,000. Local businesses
interested in this program must apply through
a lending institution.
The Lo-Doc Guaranty Program is another
SBA loan program conducted through local banking
institutions. An abbreviated documentation
process enables small businesses to be approved
for loans of up to $150,000 in a short amount
of time.
The Woman-Owned Business Guaranty Program
is a unique type of guarantee where woman
business owners can gain preapproval of their
loan proposal and then use the preapproval
to shop for a bank.
The SBA-504 program is a loan resulting
from a 100% SBA guarantee of a debenture sold
to the private sector by a Certified Development
Corporation (CDC) for up to 40% of the fixed
asset costs of a project. The process involves
submitting a proposal to a CDC and then an
application to SBA. The principal CDC for
the Gorham area is Coastal Enterprises, Incorporated
(see separate heading).
The SBA Microloan Program is administered
by Coastal Enterprises, Inc., a CDC for Gorham,
and was developed for the purpose of assisting
small business. Loans of up to $25,000 are
given directly to virtually all types of businesses
to be used for the purchase of machinery,
equipment, supplies and working capital, but
not existing debts. |
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State
Sources
Department
of Economic and Community Development (DECD)
This state government department provides
a large number of funding programs for Maine
municipalities (for more information, refer
to the DECD publication, A Guide to Public
Financing. The Maine Community Development
Block Grant (CDBG) Program offers several
types of grants to local governments, which
in turn loan funds directly to businesses.
All units of government in Maine are eligible
to apply, and groups of local municipalities
can request grants for regional or joint projects.
The following programs are those which may
be of greatest interest to businesses interested
in locating or expanding in Gorham: (see also
www.state.me.us/dolbes/labor.htm)
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Business
Assistance Program
The Business Assistance program provides up
to $400,000 to a community to either loan,
grant, or provide a combination of a loan
and a grant to meet the infrastructure and
real property needs of businesses. The objective
of the program is to assist economic initiatives
and development opportunities that will have
a significant impact on a local or regional
economy. The money must be used for projects
that are both necessary and appropriate. Eligible
activities include acquisition, reconstruction,
rehabilitation, or installation of commercial
or industrial buildings, structures, and real
property improvements. Applications are accepted
at any time. |
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Economic
Development Infrastructure Grant
The Economic Development Infrastructure Grant
allows a community to apply for up to $400,000
to develop or rehabilitate public infrastructure
so that existing and new, non retail businesses
can create or retain jobs for low to moderate
income individuals. Eligible activities include
acquisition, construction, reconstruction,
and rehabilitation associated with public
infrastructure projects such as publicly owned
commercial/industrial buildings, water and
sewer facilities, parking, streets, curbs,
gutters, sidewalks, etc. which are necessary
to create or retain jobs in the non retail
private sector for low and moderate income
persons. Application deadlines are based on
a calendar year cycle. |
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Development
Fund Loan Program
The Development Fund allows a community to
apply for up to $200,000 of gap financing
for fixed asset investment and working capital
loans for business projects that are necessary
and appropriate. Applications are accepted
at any time.
The DECD also administers a Tax Increment
Financing Program, where businesses enter
into agreements with a local municipality
to pledge a portion of the future property
taxes to finance bonds that provide capital
for support to the project. A Tax Increment
Financing (TIF) District is an area within
a municipality that is designated as a development
district to allow the municipality to financially
support a business's development program using
the revenue stream of new property taxes that
will result from improvements made to the
property.
When forming a TIF district, a community may
either fund a portion of the necessary improvements
or return a percentage of the incremental
tax revenue to the company to help offset
project costs. The maximum term for a TIF
district is 30 years, except in instances
where the municipality issues bonds to finance
a project, in which case the maximum term
is 20 years. |
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Greater
Portland Council of Governments
The Regional Economic Development Revolving
Loan Fund is a program funded by the Finance
Authority of Maine as part of a statewide
strategy to provide a financing mechanism
for small businesses. Loans of up to $200,000
are available with job creation and leveraging
of funds required. |
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Finance
Authority of Maine (FAME)
The Finance
Authority of Maine is an independent state
agency that has more than two dozen loan programs
assisting individuals and corporations of
every type. The Authority was created in 1983
to aid Maine business in its ongoing efforts
to begin, expand and operate more effectively
in today's competitive marketplace. There
are several widely used programs: |
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The
Commercial Loan Insurance Program is designed
to provide business borrowers with access
to capital of up to $7,000,000 that otherwise
would be denied by a conventional lender due
to an unacceptable level of credit risk. There
is a $2,500,000 limitation on recreational
projects. Loan proceeds may be used for the
purchase of, and improvements to, real estate,
fishing vessels, machinery and equipment.
Funds may also be applied towards working
capital.
The Commercial Loan Insurance Program is administered
in cooperation with lending institutions.
Lenders originate loans, provide construction
or interim acquisition financing without loan
insurance and, at a minimum, hold 10% of the
loan uninsured. Potential loan recipients
can contact the local banks for more information.
The Economic Recovery Loan Program
is a direct lending program that assists small
businesses in their efforts to remain viable
during difficult economic times. The Program
is meant to supplement conventional lending
sources such that borrowers should request
the minimum amount necessary to complete the
project under consideration. Requests should
not exceed $200,000, but larger loans may
be accepted where there exists substantial
public benefit. Interested parties should
contact FAME directly.
The Maine Seed Capital Tax Credit Program
authorizes state income tax credits to investors
in an amount equal to 30% of the cash equity
they provide to certain Maine businesses.
This program is designed to encourage equity
investments in young, dynamic business ventures.
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Maine
Small Business Development Centers (MSBDC)
The MSBDC provides comprehensive business
assistance and information services to the
small business community through seven subcenters,
one located at the USM Portland campus. The
program offers one-on-one counseling, training
seminars and conferences, computer learning
centers and detailed informational services
which act to strengthen growing companies
across the state. Interested parties can either
contact the Portland USM center or the Southern
Maine Regional Planning Commission.
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Private
Sources
Coastal Enterprises, Inc. (CEI)
CEI
is a private, nonprofit community development
corporation founded to create social and economic
opportunities for individuals and businesses
in Maine. Since 1979, the organization has
financed over 500 projects with $27 million
in private and public capital and has provided
counseling to more than 5,000 fledgling small
businesses. A few of the financing programs
include:
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- the Enterprise Fund for small
businesses with loan requirements of $500
to $50,000;
- the Development Fund for larger
businesses with loans between $50,000
and $300,000;
- the Venture Capital Fund which
makes equity investments with its own
capital such that CEI takes a seat on
the company's board of directors;
- the SBA's 504 program; and
- the SBA Microloan program.
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CEI
Venture, INC.
CEI also owns and operates a private, for-profit
venture capital company that is focused on
investing in socially responsible businesses
in Maine. Companies must be willing to sell
a portion of their ownership and accept some
level of participation in management. |
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North
Atlantic Capital Corp.
This is a privately owned, federally chartered
Small Business Investment Company that makes
equity investments in medium and large-sized
Maine companies. |
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Local
Banks
Perhaps the most important financial resource
for companies in Gorham are the local banking
institutions. The banks operating in Town
not only administer many of the programs offered
by FAME, SBA and other lending organizations,
but work to establish solid relationships
with local business and industry. Key
Bank, and Gorham
Savings Bank are the largest institutions
that maintain offices in Gorham, where they
have a personal interest in the financial
success of their clients.
For a more thorough listing and description
of financial assistance, see the Business
Answers publication called A Guide to Doing
Business In Maine. This document can be
obtained by calling 1-800-872-3838 instate,
or 1-800-541-5872 out-of-state.
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| Incentives
and Financing |
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| Governor's
Training Initiative |
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Eligible
Businesses:
Any
employer that is incurring work force training
costs related to unique circumstances such
as expansion, retention, or upgrading issues.
The employer must:
1)
Pay wages equal to 85% of the average wage
for that occupation in the given labor market,
and
2)
Contribute at least 50% of the premium cost
of employee health insurance, except for
small companies with fewer than 25 employees
and in business less than 3 years.
Program
Summary:
Partial
reimbursement of training costs may be provided
to employers who are hiring new employees,
and/ or retaining or upgrading their existing
work force. Training services eligible for
reimbursement include: Recruitment, Assessment,
Job Task Analysis, Workplace Literacy, High
Performance Skills, Technical Training,
Higher Education, On-The-Job Training, Workplace
Safety and Competitive Retooling.
Program
Example:
A small Portland employer needed 5 new pilots
in order to expand into the high-end business-jet
market. Also required was retraining for
existing pilots to operate the new aircraft.
GTI provided 50% of the tuition for simuflite
training for both the new and existing employees.
This assistance enabled the company to hire
Maine residents rather than experienced
pilots from out-of-state.
Maine
Quality Centers Program
Eligible
Businesses:
New or expanding firms creating a minimum
of eight (8) new full-time jobs with benefits
in the state of Maine.
Program
Summary:
This program provides 100% state-financed
education and training for new employees,
as well as customized recruitment and guaranteed,
fast-track training designed to employer
specifications. This program is offered
at no cost to the company or trainees, and
is delivered by the state's technical colleges.
Program
Example:
A leading manufacturer and builder of industrial
equipment needed 15 mechanical assemblers
to support a company expansion. These assemblers
needed to be trained in a range of mechanical
and electrical assembly operations and would
have to be available to the company within
nine months. With Quality Centers funding,
the company worked with the local technical
college to develop a 12-week education and
training program covering mathematics, blueprint
reading, basic hydraulics, pneumatics, health
and safety, and more. The courses were offered
four evenings per week and every Saturday.
Recruitment and screening was provided through
the Maine Job Service and the company hired
the 15 individuals as planned.
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| Business
Equipment Property Tax Reimbursement Program
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Eligible
Businesses:
Any
business (except public utilities, radio paging
services, mobile communications, cable television,
satellite-based direct television broadcast,
mulitichannel, and multipoint television distribution
services) that pays property taxes on qualified
business property.
Program
Summary:
The
program reimburses, for up to 12 years (less
any number of years for which an Investment
Tax Credit was claimed), all local property
taxes paid on eligible business property.
Once the business pays its taxes, it has
60 days in which to file for BETR. Once
the Bureau of Taxation
receives the BETR form, a check will be
issued, on average, within a month.
The
definition of eligible business property
is defined by law, but generally means personal
property first placed in service in Maine
after April 1, 1995. Eligible property includes
certain property affixed or attached to
a building or other real estate if it is
used to further a particular trade or business
on that site and so may include property
which would be classified as real property
for other purposes. Starting with property
tax year April 1, 1997, office furniture,
lamps and lighting fixtures are not eligible
for reimbursement and are excluded from
the program.
Program
Example:
Cote's
Cookie Co. purchased a $100,000 dough-mixing
machine on July 7, 1997. When the town assessed
the new machinery on April 1, 1998 they
valued the property at $95,000. Based on
the town's mil rate of 15, the company paid
a local property tax of $1425. The company
then filed an application with Maine's Bureau
of Taxation for reimbursement of the property
tax. The company received full reimbursement
of the $1425 it paid in local property tax,
and will continue to be eligible for reimbursement
for up to a total of 12 years.
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| Employment
Tax Increment Financing
Eligible
Businesses:
Any
business that hires a minimum of 15 net
new employees within a two year period,
where those employees are: 1) paid a wage
that exceeds the average per capita income
in the county of employment; 2) provided
with group health insurance, and; 3) provided
with an ERISA qualified retirement program.
The business must also be able to demonstrate
that their expansion project will not go
forward without ETIF funds.
Program
Summary:
ETIF
is available to assist in the financing
of business investment projects that create
at least 15 net new, high quality jobs in
Maine. An ETIF-approved business would receive
either 30, 50 or 75 percent of the state
income tax withholdings paid by qualified
employees for up to ten
years. (Qualifying jobs created in labor
market areas with higher than average unemployment
earn a 50 percent reimbursement, while those
in areas at or below the state average earn
a 30 percent reimbursement. Qualifying jobs
created in a labor market area with 150
percent of the state unemployment rate earn
a 75 percent reimbursement.) The amount
of annual payment is based upon the actual
number of qualified employees above the
company's base level of employment. The
company may not accrue ETIF benefits for
any period of time wherein
employment, wages and/or employee benefits
fail to meet the minimum qualification criteria.
(Also, please note that ETIF cannot be taken
concurrently with the Jobs & Investment
Tax Credit.)
Program
Example:
A
company is considering adding 30 jobs and
investing $1 million in Androscoggin County.
The new jobs will be equally divided in
pay at $8, $9.50 and $11 per hour. All employees
are provided with group health insurance
and a retirement program. The company is
looking at other states also, and will base
its location decision upon the projected
return on investment. Androscoggin County's
average annual per capita income is $19,012
($9.14/hr), and the labor market area unemployment
rate is above the state average. In this
scenario, 20 of the 30 new employees would
be considered "qualified" by virtue
of their wages (those above $9.14/hr) and
benefits, entitling the company to seek
ETIF approval. When the company demonstrates
that ETIF provides a return that will result
in the investment being made in Maine, the
application will be approved. Assuming 1)
an average state income tax withholding
rate of 3.5%, 2) that employment levels
and wages do not change, and 3) the company
remains qualified, the company would then
be eligible for an annual reimbursement
of $7,480 for ten years -- a total of $74,800.
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| Tax
Increment Financing
Eligible
Businesses:
Any
business making significant capital investments
within its municipality wherein the municipality
is willing to support the investment financially
through the use of the revenue stream of
new property taxes resulting from these
investments.
Program
Summary:
TIF is strictly a local financing tool wherein
a municipality may use all, or a portion
of, the new property taxes that result from
an investment project within a designated
district to assist in that project's financing.
The municipality has the option of issuing
bonds (which are retired using the tax increment),
or paying the tax increment directly to
the investing business to cover project
costs. Tax Increment Financing districts
may be designated for a period of up to
30 years. Bonds may
be issued under this program for up to 20
years. The designation of a TIF district
requires a public hearing and the majority
vote of the municipal legislative body.
Program
Example:
A business expects to invest $500,000 in
buildings and site improvements on vacant
land (currently valued at $100,000), and
install $400,000 in manufacturing machinery
and equipment. The municipality's property
tax mil rate is $20 per $1,000 of valuation,
and the business will have a tax obligation
of $20,000 per year once the investments
are recorded on the tax rolls. Of this tax
obligation, $18,000 is incremental, and
thus eligible for TIF.
Scenario
1 (Credit Enhancement Agreement): The
municipality agrees to "capture"
75% of the incremental tax revenues for
a period of fifteen years and return them
to the business to assist in financing the
new building. The business would receive
$13,500 in the first year of the
TIF, though subsequent payments might be
adjusted for equipment depreciation, real
estate appreciation, and future capital
investments. All things being equal, however,
the business would receive approximately
$202,500 over the life of the TIF.
Scenario
2 (Municipal Bond Financing): The business
needs a road and utilities installed for
$150,000. The municipality agrees to pay
this cost, issuing a 20 year TIF bond in
the amount of $150,000. Annual debt service
on the bond will be $12,338, which the municipality
will "capture" out of the incremental
taxes.
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| Sales
Tax Exemptions
Manufacturing:
Sales of machinery and equipment used by
the purchaser directly and primarily in
the production of tangible personal property
is eligible for a sales tax exemption. In
addition, items consumed or destroyed directly
or primarily in production, and repair and
replacement parts
for qualified production equipment are exempt
from sales tax.
Research
and Development:
Sales of machinery and equipment used by
the purchaser directly and exclusively in
research and development is eligible for
a sales tax exemption.
Fuel
& Electricity for Use in Manufacturing:
This program exempts from sales tax 95%
of the sales price of all fuel and electricity
purchased for use at a manufacturing facility.
Custom
Computer Programming:
This program exempts from sales tax the
purchase of custom computer programming
effective October 1, 1997.
Biotechnology:
Sales of machinery, equipment, instruments
and supplies used by the purchaser directly
and primarily in a biotechnology application
are eligible for a sales tax exemption.
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| Jobs
and Investment Tax Credit
Eligible
Businesses:
Any business, other than a public utility,
that invests at least $5 million in a taxable
year in most types of personal property
in Maine and creates 100 new jobs over the
ensuing 2 year period.
Program
Summary:
The program provides a 10% credit against
Maine income taxes for investment in most
types of personal property that generate
at least 100 new jobs within two years of
the date the investment is placed in service,
as long as the investment is at least $5
million for the taxable
year. The credit amount is limited to $500,000
per year with carry forwards available for
6 years. Thus, the total credit can be up
to $3,500,000.
(Please
note, the Jobs and Investment Tax Credit
may not be taken concurrently with the Employment
Tax Increment Financing Program.)
Program
Example:
Metalmania Corp. is a medium-sized metal
manufacturer that is in growth mode. The
company invested $35,000,000 during 1996
in new and used machinery and equipment
and added 100 new jobs by the end of 1997.
The company is eligible for a $3,500,000
(10% x $35,000,000) tax credit under Maine's
Jobs and Investment Tax Program. Metalmania
Corp. can take advantage of the credit by
reducing its income tax liability by a maximum
of $500,000 each year for 7 years.
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