Finance & Grant Programs
Finance & Grant Programs
Customized packages will be developed to meet client criteria.
The primary source of financial assistance to manufacturers offered by the state is the issuance of tax free or taxable bonds. Tax free bonds are subject to IRS guidelines and are generally only available for land, building, and equipment for manufacturing operations. IRS regs basically restrict the use to $10 million per project and a company total cap of $40 million tax free issues. Mississippi requires an irrevocable, back-up letter of credit from a rated bank to cover the outstanding balance on the bonds.
Companies go through a short, simple, cost free process to become induced into either the Small Enterprise Development Program (bonds up to $2 million) or the Industrial Revenue Bond Program ($2 to $10 million). Generally, the closing costs associated with tax free issues are prohibitive on issues of less than at least one half million dollars.
One advantage of the use of bonds is that state income taxes are reduced significantly for a period extending three years beyond the maturity date of the bonds. On a 15 year issue, GAP could eliminate state income taxes from income produced in the facility for the first 10 years, then 80% of liability could be eliminated for the next eight years. The actual amount of the extended credit is dependent upon the number of jobs created.
MBIA funds are loaned to a city or county to finance acquisitions or improvements, which compliment private investment. At least a three to one private match is required as well as substantial job creation. Government agencies borrowing such funds generally require a backup letter of credit guaranteeing reimbursement by the company. Interest rates are determined by the financial impact / quality of the jobs being created. This program is seldom used due to its restrictions. Further information can be provided if appropriate.
Mississippi Major Impact Authority
This is generally used for projects of $300 million or larger, and/or which create 1,000 or more jobs. Funds flow from the state to local government entities to help with the project’s infrastructure related needs. These may be grant funds.
Cities and counties may borrow up to $1 million per year, each, generally at 3% interest for economic development purposes — primarily for infrastructure or building related use. The firm which benefits from the use of said funds must repay them and generally is required to provide a backup letter of credit as a guarantee of payment. Funds must be used for publicly owned purposes.
There are several other very specialized potential sources of funds, which are not applicable to most projects. Further information will be provided if deemed appropriate. New Market Tax Credits are one of these available in parts of our service area.