Financial Resources
INDUSTRIAL DEVELOPMENT
Revenue Bonds
Under state and federal laws, the state of Nevada may issue tax-exempt bonds. Companies may then use revenue derived from these bonds to make expenditures for qualified purposes, that is, land, buildings and equipment. This financing vehicle can provide investment capital at interest rates substantially below conventional levels since bond buyers pay no federal income tax on the interest earned from the bonds.
Since passage of the 1986 Tax Reform Act, new Industrial Development Bond financing is confined to manufacturers, certain utility projects and to qualified 501(c) (3) borrowers. The complete process takes approximately four to six months.
Nevada Revolving Loan Fund
The Nevada Commission on Economic Development administers a revolving loan program that can provide partial financing, up to $100,000, for worthwhile business projects. Projects must meet federal and state guidelines. For additional information: www.expand2nevada.com
Community Development Block Grant Program
CDBG funds the nationally recognized Community Business Resource Center (CBRC). The CBRC is a collaboration between a group of non-traditional lenders including CED’s Nevada Revolving Loan Fund (NRLF), the USDA Intermediary Relending Program administered by the Rural Development Corporation, the Nevada Development Capital Corporation loan fund and the Nevada Microenterprise Initiative. The NRLF provides funding for business loans up to $100,000. NRLF loans are available to businesses outside Reno, Sparks and Clark County. http://www.hud.gov/offices/cpd/about/cpd_programs.cfm
U.S. Small Business Administration Loan Programs
SBA 7 (A) Loan Guarantee Program
The SBA 7(A) Loan Guarantee Program guarantees up to 70 to 90% of loans made by a commercial lending institution. Loan structure is usually a bank (70-90%) and owner-equity (25-33%) loan. Targeted toward small businesses, particularly those unable to obtain conventional financing, loans may be used for working capital, fixed asset acquisition and leasehold improvements. Real estate loans are for up to 25 years, while working capital loans cannot exceed seven years. Interest rates are varied, and loans must be fully collateralized and personally guaranteed. http://www.sba.gov/financing/sbaloan/7a.html
Nevada Development Capital Corporation (NDCC)
The Nevada Development Capital Corporation (NDCC) is a statewide community development corporation that was created to make loans to small businesses that cannot qualify for conventional bank financing.
Loans will be in the range of $25,000 to $150,000. NDCC will also subordinate to bank financing if the needs of the business exceed $150,000. Interest rates and fees are based on financial risk and collateral. www.nsdc-loans.com
Nevada State Development Corporation (NSDC)
Nevada State Development Corporation (NSDC) is a certified economic development company that works closely with banks, government agencies and other private lending programs to help small business owners obtain financing for their business growth and expansion. The company provides general financing assistance and counseling with special support of the SBA 504 Loan Program. The SBA 504 loan program provides real estate and fixed asset financing for a healthy, expanding small business with a net worth of less than $6 million and after-tax profits of less than $2 million. The program finances 40% of total project cost (up to a maximum loan of $750,000) with participation by a local bank for approximately 50% of cost, and an applicant contribution of 10 %. Long-term loans for 10 or 20 years carry a fixed-rate of interest that is tied to the applicable U.S. Treasury note rate at the time of funding. Collateral typically includes a deed of trust on the project property, personal guarantees and hazard insurance. www.nsdc-loans.com
Export-Import Bank of the United States
The Export-Import Bank (also known as Ex-Im Bank) is an independent government agency that helps finance the overseas sales of U.S. goods and services. The following three services facilitate exports by reducing financial risks: www.exim.gov
Working Capital Guarantees
The Ex-Im Bank will guarantee bank loans to enable small and medium-sized companies to buy or produce U.S. goods or services for export. Certain lenders have been given delegated authority enabling them to commit Ex-Im Bank’s guarantee.
Foreign Credit Insurance
Export credit insurance policies protect exporters against both the political and commercial risks of a foreign buyer defaulting on payment. Ex-Im Bank’s credit insurance allows exporters to finance receivables more easily by assigning the proceeds of the policy to a lender.
Financing of Foreign Buyers
Ex-Im Bank will directly lend or guarantee loans to foreign buyers of U.S. goods and services. These loans or guarantees are made at fixed or variable rates and are priced and termed to match foreign competition.
(Source: http://www.edawn.org/doingbusiness/financial.cfm)
Direct Financial Incentives
Industrial development bonds: The Department of Business and Industry issues tax-exempt industrial development bonds to provide low-interest financing for eligible businesses. The interest rate is negotiated between the sponsor and the lender. The maximum term is 40 years. Cities and counties also issue industrial development bonds for manufacturing, industrial warehousing, research and development, and pollution-control facilities. The maximum term is 40 years.
Direct state loans: The Nevada Revolving Loan Fund program assists Nevada small businesses in obtaining "gap" financing to complete their business expansion projects. Loans may be used for any business expansion need, especially purchases of machinery, equipment, inventory, and working capital.
Up to $100,000 is available to Nevada businesses that cannot secure 100% financing from commercial lenders. The rates and terms are tailored to the particular needs of the business, with rates generally below prime and terms amortized up to 15 years. The program requires the sponsorship of the local government and must meet state program job creation requirements, including the hiring and training of persons from low to moderate income households.
Customized industrial training: Nevada's Customized Industrial Training Program assists new and expanding businesses to train new or potential employees. Training developed jointly by the company, the contract agency, and the educational institution, ranges from recruitment to classroom and on-the-job training. Trainee selection is at the discretion of the company. This program provides job assistance to new businesses. The funds allow a company to quickly train workers in the specialized skills the company requires. Participating businesses contribute 25 percent of the total training costs. Potential applicants are recruited and screened by the agency. The final selection is the responsibility of the business.
Technical and support services: The Procurement Outreach Program provides bid information and direct technical assistance to businesses selling goods and services to the government. The Nevada Small Business Development centers offer advice on operating businesses. Services are free of charge in most cases.
(Sources: CB Richard Ellis and http://www.edawn.org/doingbusiness/financial.cfm)