Business Incentives
Financial Assistance Programs
Programs available through the Mississippi Business Finance Corporation:
* Loan Guarantee Program
* Minority Business Enterprise Loan Program
* Industrial Development Revenue Bond Program
* Small Enterprise Development Program
* Rural Economic Development Assistance Program
* Minority Surety Bond Guaranty Program
Programs available through the Mississippi Development Authority:
* Mississippi Business Investment Act Program
* Airport Revitalization Revolving Loan Program
* Port Revitalization Revolving Loan Program
* Agribusiness Enterprise Loan Program
* Mississippi Small Business Assistance Program
* Mississippi Major Economic Impact Authority
* Economic Development Highway Program
* Mississippi Access Road Program
* Energy Investment Program
* Capital Improvements Revolving Loan Program
* Freight Rail Service Projects Revolving Loan
* Community Development Block Grant Program
Programs available through local government
* Local Industrial Development Revenue Bonds
* General Obligation Bonds
Loan Guarantee Program
This program provides guarantees to private lenders on loans made to small businesses. This guarantee reduces the lender’s risk and may enable a small business to obtain a loan that may not otherwise be possible without the guarantee protection. With the guarantee, lending institutions may also extend longer term financing.
The maximum guarantee is 75% of the total loan or $375,000, whichever is less. The maximum repayment term is twenty years with the interest rate established by the lender.
Loan proceeds may be used for all project costs associated with the establishment or expansion of a small business, including fixed asset purchases, working capital, start-up costs, rental payments, interest expense during construction and professional fees relating to the project.
The principals of the business must be creditworthy and have equity in the project for which the financing is being requested.
The lender will require collateral to reasonably secure the loan. The loan amount may not exceed 90% of the fair market value of the collateral pledged.
The borrower must pay a one-time guarantee fee of 2% of the guaranteed portion of the loan at the time of closing.
Minority Business Enterprise Loan Program
This program is designed for the purpose of providing funds to socially and economically disadvantaged minority- or women-owned small businesses. To be eligible for assistance, the ownership and day-to-day management of the business must be at least 60% minority or female.
Loan proceeds may be used for all project costs associated with the establishment or expansion of a minority business, including the purchase of fixed assets or inventory or to provide working capital.
The minimum MBFC loan is $2,000 and the maximum loan is $250,000. MBFC may fund up to 100% of a total project of $15,000 or less and up to 50% of a total project greater than $15,000. The borrower must inject or have at least 5% equity in the project.
Repayment terms are determined by the amount of the loan and the collateral securing the debt, and may extend up to fifteen years. Interest rates on the MBFC portion of the loan are set at below-market rates for the term of the loan.
Applications for this program must be submitted to one of the Qualified Entities approved for participation by MBFC. The Qualified Entities include the ten Planning and Development Districts, Community Development Corporations and other similar entities.
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Industrial Development Revenue Bond Program
The Industrial Development Revenue Bond Program reduces the interest costs of financing projects for companies through the issuance of both taxable and tax-exempt bonds. Additionally, ad valorem and sales tax exemptions are granted in conjunction with this type of public financing.
The bonds must be secured by an irrevocable, direct-pay letter of credit or other credit enhancement acceptable to MBFC.
The proceeds of a bond issue may be used for the acquisition and construction of real property, machinery and equipment, capitalized interest, reserve funds, and a limited amount of the cost of issuance in accordance with provisions of the Internal Revenue Code.
Although there is no restriction on the amount of taxable debt which may be incurred, there is a $10 million cap on tax-exempt financing. The maximum term of a bond issue will be equal to 120% of the average life of the financed assets or thirty years, whichever is less. The interest rate will be determined by the bond purchaser. The borrower will pay the costs of issuance and any other applicable fees.
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Small Enterprise Development Program
The issuance of State General Obligation Bonds provides funds for manufacturing and processing companies to finance fixed assets, i.e. land, buildings, new machinery and new equipment at below market interest rates for terms of up to fifteen years.
Although a company may qualify for more than one loan under this program, the aggregate amount loaned to any company cannot exceed $2 million. Interest rates on these loans are equal to the net interest rate on the bonds issued by the State plus a servicing fee. The borrower will pay the costs of issuance and any other applicable fees.
A project must create a minimum of ten jobs, and loans cannot exceed 90% of the market value of the financed assets. Companies participating in the program will be required to obtain a bank letter of credit guaranteeing the loan.
Rural Economic Development Assistance Program
Companies financing projects through the Small Enterprise Development or Industrial Revenue Bond Programs which are administered by MBFC may be eligible to participate in the Rural Economic Development Assistance Program. The program allows eligible companies to receive credits on Mississippi corporate income taxes.
Mississippi corporate income tax credits will be granted at the end of a company’s fiscal year and will be based on the Mississippi tax liability at that time. The amount a company will be required to pay in Mississippi income tax could be reduced by an amount up to the debt service paid during the tax year.
The total amount of tax credits earned may not exceed the annual debt service on the bond issue. These credits may be used to offset up to 80% of the company’s state corporate income tax liability.
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Minority Surety Bond Guaranty Program
This program was created to enable minority contractors, not meeting the surety industry’s standard underwriting criteria, to obtain bid and performance bonds on contracts with state agencies and political subdivisions within Mississippi. With successful completion of contracts guaranteed under the program, coupled with management and technical assistance by the program administrator and others, minority contractors will grow in experience, management skills and financial stability sufficient to obtain surety bonding on their own.
Maximum bond guaranty is 75% of contract bond amount or $112,500, whichever is less. A contractor may have more than one guaranteed bond as long as total guarantees do not exceed $112,500. A contractor applicant must be certified with the Minority Business Enterprise Division of MDA, have its principal place of business in the state, meet experience and financial standards appropriate to the contract, must have been in business at least one year prior to application, subcontract no more than 75% of a qualified contract and show reasonable evidence of inability to secure bonding under normal market conditions.
Mississippi Business Investment Act Program
Through the issuance of State General Obligation Bonds, low-interest loans are provided to counties or incorporated cities or towns to finance improvements which complement investments by private companies.
To be eligible for financing under this program, a private company must invest at least $3.00 for every $1.00 it receives in state assistance and must create and maintain new jobs as required by state statute and MDA. The project to be financed must be necessary for the operation of the company, and it must be determined that other financing options are unavailable.
The minimum loan amount for a project is generally limited to $500,000 for a term of ten years or the estimated useful life of the project to be financed, whichever is greater. Rates of interest are set by MDA on a scale based on the number and quality of jobs created.
Loan proceeds may be used for the acquisition, expansion, or improvement of land, buildings, and infrastructure.
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Mississippi Airport Revitalization Revolving Loan Program
Funds from the issuance of state bonds provide loans to airport authorities for the construction and/or improvement of airport facilities. Airport Loan funds may be used for 100% project financing. The maximum loan amount for any one project is $500,000, with a maximum term of ten years and an interest rate of 3% per annum.
Mississippi Port Revitalization Revolving Loan Program
The Mississippi Port Revitalization Revolving Loan Program is designed for making loans to state, county, or municipal port authorities for the improvement of port facilities. Funding for loans is derived from the issuance of state bonds. The maximum amount which may be loaned to finance any one project is $500,000, with a term of up to ten years and an interest rate of 3% per annum. Port Loan funds may be used for 100% financing.
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Agribusiness Enterprise Loan Program
Designed to encourage the extension of conventional financing by lending institutions, the Agribusiness Enterprise Loan Program provides interest-free loans to agribusinesses. An eligible agribusiness is any aquaculture; horticulture; or agriculture-related industrial, manufacturing, research and development, or processing enterprise.
The maximum Agribusiness Loan is 20% of the total project cost or $200,000, whichever is less. Proceeds may be used to finance buildings and equipment and for costs associated with the purchase of land (appraisals, title searches, etc.). However, proceeds cannot be used to purchase land. All loans must be guaranteed by either the Farm Service Agency, the Small Business Administration, or a direct lender
Mississippi Small Business Assistance Program
The Mississippi Small Business Assistance Program was established for the purpose of providing funds to Qualified Entities to establish revolving loan funds to assist in financing small businesses.
Qualified Entities were approved by MBFC and are defined as Mississippi Planning and Development Districts (PDDs), Small Business Investment Corporations, Community Development Corporations, and other similar entities.
A small business is defined as any for-profit commercial enterprise with fewer than 100 full-time employees; less than $2 million in net worth or less than $350,000 in net annual profit, after taxes, during two of the last three years. A company meeting any of the above criteria is eligible to seek assistance under this program. No small business shall receive funding under this program in excess of $100,000 or more than 50% of the total project cost.
Maximum terms of the loans shall be fifteen years for land and buildings, ten years for equipment, five years for working capital, and three years for inventory.
Interest rates cannot be less than 5% per annum or more than 4% above the Federal Reserve discount rate plus servicing fees.
Small businesses should contact a Qualified Entity in their area for application forms and loan information.
Mississippi Major Economic Impact Authority
Unique in the nation, this program allows the state, through the issuance of general obligation bonds, to assist local communities in meeting the development requirements inherent in large capital projects, thereby generating an investment in the quality of life in such communities. Funds may be used to improve transportation, education, recreation and medical facilities within sixty-five miles of a project site. Certain other infrastructure needs are also eligible for financing.
Major Impact Authority projects can be new projects or expansions of existing facilities which have a minimum initial investment of $300 million by the private sector or the U.S. Government. Eligible projects include industrial or commercial projects, research and development, warehousing, distribution, transportation, processing, mining establishments, U.S. Government projects and tourism facilities.
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Economic Development Highway Program
The Economic Development Highway Program assists political subdivisions with the construction or improvement of highway projects which encourage high economic benefit projects to locate in a specific area. A high economic benefit project is any new private investment of $50 million or more by a company in land, buildings or depreciable fixed assets, or an investment of at least $20 million by a company which has statewide capital investments of at least $1 billion in the aggregate.
A private company engaged in agriculture, aquaculture, mariculture, processing, distribution, warehousing, manufacturing, research and development, or any air transportation and maintenance facility, regional shopping mall, large hotel, resort, movie industry studio or the federal government with a project meeting the high economic benefit criteria is eligible for assistance. The highway must be necessary to ensure adequate and appropriate access to the proposed project.
Mississippi Access Road Program
Under this program, MDA and the Mississippi Department of Transportation assist local entities in the construction of links of highways or roads necessary to connect new and existing industrial sites to adequate road facilities.
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Energy Investment Program
Through the Energy Investment Program, MDA provides financial assistance to individuals, partnerships or corporations making energy conserving capital improvements or designing and developing energy conservation processes.
This program offers low interest loans of up to $300,000, with maximum terms of seven years. Each loan may be secured by a lien on the measures installed, other business assets, personal guarantees of the owners or officers, performance bonds or a combination of these.
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Capital Improvements Revolving Loan Program (CAP)
The Mississippi Capital Improvements Revolving Loan Program (CAP) is designed for making loans to counties or municipalities (Applicant) to finance capital improvements in Mississippi. Counties and municipalities are encouraged to use these loans in connection with state and federal programs. Funding for loans to applicants is derived from issuance of state bonds.
Eligible projects include:
• Construction or repair of water and sewer facilities.
• Construction or repair of drainage systems for industrial development.
• Improvements in fire protection.
• Construction of new buildings for economic development purposes.
• Renovation or repair of existing buildings for economic development purposes.
• Construction or repair of access roads for industrial development.
Loan terms:
The cumulative maximum loan amount for any eligible local unit of government during a calendar year is $1 million. The term of any loan shall not exceed 20 years. The loan amount will be limited by the applicant’s ability to repay the loan within acceptable terms. The rate of interest on loans which qualify for tax exempt status shall be at 3 percent per annum, calculated according to the actuarial method at the time of loan approval. Taxable CAP loans shall be at the true interest cost on the most recent issue of 20 year state general obligation bonds occurring prior to the date such loan is made.
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Freight Rail Service Projects Revolving Loan Progream (RAIL)
Municipalities may receive loans under the Mississippi Freight Rail Service Projects Revolving Loan Program to finance freight rail service projects in Mississippi. Counties and municipalities are encouraged to use these loans in connection with other state and federal programs. RAIL was enacted by the State Legislature during the Regular 1995 Session. (See Section 57-44-1 et seq., Mississippi Code, Annotated.)
Eligible projects include:
• A project which involves the acquisition, construction, installation, operation, modification, renovation or rehabilitation of any freight rail service facilities.
• A project which may include any fixtures, machinery or equipment used in conjunction with any such facilities.
• Any project for any freight transportation purpose.
The cumulative maximum loan amount for any eligible local unit of government during a calendar year is $1 million and the term of any loan shall not exceed 15 years. The rate of interest on a RAIL loan shall be 1% below the Federal Reserve Discount Rate at the time of loan approval.
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Community Development Block Grant Program
The State Community Development Block Grant (CDBG) Program was established to aid in the development of viable communities which provide a suitable living environment, decent housing, and economic opportunities for their residents.
The CDBG Program makes grants available to incorporated municipalities and county governments that show a genuine need for specific projects and can meet the program’s state and federal eligibility requirements. Benefit to low- and moderate-income persons is the basic thrust of funding. All Mississippi cities and counties are eligible for CDBG funding, except for the entitlement cities of Jackson, Biloxi, Gulfport, Hattiesburg, Moss Point and Pascagoula.
Communities may apply for CDBG funding through the category of Economic Development. The primary criteria for economic development funding is to provide jobs for persons of low/moderate income. The Economic Development category accepts applications for communities in three subcategories:
•Economic Development Public Improvements funds such activities as the provision of water, sewer, and access roads within a community.
• The Economic Development Loan Program makes it possible for for-profit businesses to promote economic development by creating or retaining jobs primarily for low- and moderate-income families.
Local Industrial Development Revenue Bonds
Local political entities in Mississippi, including counties, supervisors’ districts, incorporated cities and towns, have the authority to issue tax-exempt and taxable industrial development revenue bonds to finance new or expanding industrial enterprises. There is no election approval required unless 20% or more of the entity’s electors object to the bond issuance in writing. Ownership of a bond-financed facility is retained by the issuing political entity, which leases it to a company for rental sufficient to pay the annual principal and interest on bonds.
Industrial development revenue bonds can finance up to 100% of total project costs, including land, buildings, fixtures, new equipment, new machinery and professional fees.
Facilities financed by such bonds are allowed up to a ten-year property tax exemption, in addition to being exempt from most sales and use taxes on project related purchases during construction.
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General Obligation Bonds
Local political entities have the authority to issue general obligation bonds for the purpose of acquiring sites and constructing facilities for lease to new or expanding industries with rentals sufficient to amortize the debt service on the bonds.
General obligation bonds carry the full faith and credit of the issuing political entity. As title to the property remains with the political entity issuing the bonds, no taxes, except school taxes, are assessed on the improvements made with the proceeds of such bonds. An agreement is negotiated between the industry and the political entity covering the details of the issuance of the bonds and the lease.