Incentives & financing

GO Zone Bonds | Other GO Zone incentives | Renewal Communities | State incentives | Loans & Grants | Recovery financing/bridge loans | Venture capital | Banks and other sources of financing

Financing a startup. Financing an expansion or new facility. Making the numbers work. It's fundamental, and businesses of all sizes are finding it's easier in Louisiana thanks to a commitment at the local, state and federal levels to put the right tools in place.

For established industries and major manufacturing projects, the state has been working for years to establish a suite of incentive programs that reward expansion and job creation. The Gulf Opportunity Zone clinched the deal, making Louisiana today one of the most favorable environments for capital investment in America.

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Small businesses in the state also have an assortment of financing options, from private lenders to SBA loan programs to the Louisiana Economic Development Corporation, which was set up to help with loan guarantees, participation and venture capital.

This section provides an overview of these resources, along with a listing of the contacts you will need to find out more about each one.

2007 INCENTIVE UPDATES
Contact Louisiana Economic Development or your local chamber for details about the following 2007 legislative changes to Louisiana’s state incentives for research and business:

HB 408: New research and development incentive for nonprofit and governmental research centers approved by LED. Tax incentive of 6% of payroll for 10 years on the creation of quality jobs. Also includes technology commercialization credit, which provides companies a 40% credit for technology commercialization costs up to $250,000 per year.

HB 640: The Angel Investor Tax Credit has been give greater flexibility by making the credit refundable.

SB 188: The New Markets Tax Credit program has been restructured, including removing the cap on total credits per year, increasing the total credit allowed and the credit on the initial date of investment, and capping the investment amount in a single business.

SB 250: The Enterprize Zone tax credit has been made easier for companies to utilize. The new law authorizes a business to receive a $2,500 enterprise zone credit if 35% of its employees are residents of any enterprise zone, not just an enterprise zone within the parish of its location or a contiguous parish.

GULF OPPORTUNITY ZONE
The Gulf Opportunity Zone Act of 2005 is federal legislation that provides for federal tax incentives to areas affected by hurricanes Katrina and Rita. Many of the GO Zone provisions described below will expire at the end of 2007. Taking advantage of these incentives now may reduce your taxes next filing season.

Other provisions have been extended through 2010 for select parishes, including the 50% bonus depreciation and net operating loss carryback, which allows businesses to leverage investments for refunds on past years taxes. This extension includes Calcasieu, Cameron, Orleans, Plaquemines, St. Bernard, St. Tammany and Washington parishes.

In all, 37 parishes are eligible for some provisions of the GO Zone legislation (see map).

Learn more about GO Zone opportunities in The Louisiana Gulf Opportunity Zone Business Guide.

GO Zone Bonds
The GO Zone legislation created a new category of tax-exempt private activity bonds referred to in the GO Zone Act as "Gulf Opportunity Zone Bonds." GO Zone Bonds present a unique opportunity for private business owners and corporations to borrow capital at very favorable tax-exempt rates to acquire, construct, reconstruct or renovate non-residential real property, qualified residential rental projects, and public utility property in the GO Zone.

As of Oct. 23, GO Zone Bond funding was still available through this special program, but applications for the bonds had already exceeded the $7.9 billion allocation created by the GO Zone legislation.

However, many projects are still going through the approval process, and projects located in the GO Zone’s most heavily damaged parishes may be given priority over projects not in these parishes, assuming they meet other criteria.

• 95 percent or more of the net proceeds must be used for qualified project costs in the GO Zone,
• projects must be designated by State as qualified
• bonds must be issued prior to Jan. 1, 2011.

• New GO Zone property cannot qualify for both tax-exempt bond financing and the special 50% bonus depreciation, the other key tax incentive for GO Zone investments. Consult with your commercial banker, legal counsel, or tax adviser about the best way to finance your capital investment in the GO Zone.
• Certain types of projects are excluded: golf courses, country clubs, racetrack or other gambling facilities, alcoholic beverage stores.
• While proceeds of the bonds must be used for qualified projects in the GO Zone, the private companies receiving the proceeds and pursuing the projects need not have previously done business in the GO Zone or in Louisiana.
• The State of Louisiana authorizes the issuance of the bonds, and a state conduit issuer then issues the bonds on behalf of the qualified borrower.
• Bonds must be recommended by Louisiana Economic Development and approved by the governor and the State Bond Commission. The application process begins with LED.

• The property acquired must be qualified GO Zone property (see list below).
• Substantially all of the use of the property must be in the GO Zone and be in the active conduct of your trade or business.
• The original use of the property in the GO Zone must not have begun before August 28, 2005 (but the property may have been used property outside of the GO Zone prior to your acquisition).
• Must be placed in service before Dec. 31, 2008, for residential and non-residential real property and Dec. 31, 2007, for all other property.
  • Exception: Qualifying real estate for the majority of the Gulf Opportunity Zone parishes and counties must be placed in service by Dec. 31, 2008. For Qualified GO Zone Extension property, the placed in service date was extended to Dec. 31, 2009, under the Tax Relief and Health Care Act of 2006. This extension applies only in Calcasieu, Cameron, Orleans, Plaquemines, St. Bernard, St. Tammany and Washington parishes.

• tangible personal property with a MACRS or ADS recovery period of 20 years or less
• computer software other than software that would be amortized over 15 years
• water/utility property
• qualified leasehold improvement property
• non-residential real property
• residential real property

• Increased Section 179 expensing.
• Enhanced NOL carryback.
• Increased tax credits for rehabilitation expenditures.
• New Work Opportunity Tax Credit.
• Enhanced New Markets Tax Credits.

• Wage credits
• Deductions
• Low cost bond financing
• Zero percent capital gains rate for RC assets

• Lousiana Enterprise Zone Program.* Provides tax credits and rebates including a $2,500 tax credit for each net new permanent job created during the first five years of operation and a rebate of the state's 4% sales/use tax on materials, machinery and equipment purchased during the construction period and used exclusively on site.
• Quality Jobs Program.* Rebates up to 6% of a qualifying company's gross annual payroll associated with new jobs created by a project for up to 10 years, and may rebate the state's 4% sales/use tax on materials, machinery and equipment purchased during the construction period and used exclusively on site.
• Industrial Property Tax Exemption Program.* Abates local property taxes for 10 years on a manufacturer's investment in buildings, machinery, equipment and other properties that are part of the manufacturing process and remain on the plant site.
• Governor's Rapid Response Fund. The Legislature has made this a permanent $10 million annual fund for making major awards to businesses with economic development projects that can potentially create/retain jobs in Louisiana.
• Headquarter Growth Program. Eliminates the taxes on interest and dividends for companies locating their headquarters in Louisiana and aligns with other states to apportion income from capital gains.
• Research and Development Credit. Companies claiming Federal income tax credit for research activities can claim credit against state income and corporation franchise taxes.
• Rail Rolling Stock Tax Exemption. Offers tax incentives to companies to encourage the manufacture and repair of rail rolling stock within Louisiana.
• Early Stage Angel Investment Incentives. HB 627 of the 2005 Regular Session provides accredited Louisiana investors with an incentive for making early-stage investments in Louisiana-based startups. Investors may receive a 50% tax credit divided into portions of 10% over five years on income or corporation franchise tax owed to the state for early-stage investments in Louisiana startups.
• Louisiana Film Tax Incentive Program. Provides a flat 25% tax credit based upon investments of $300,000 and up. Productions shot in Louisiana can take a 10% credit of their aggregate Louisiana payroll, in addition to an infrastructure tax credit of 15% of the investment for the construction of new production facilities or studios.
• Digital Media Tax Incentive Program. Allows video game developers to earn a 20% tax credit against expenditures for production and long-term infrastructure in Louisiana.
  *Note: Programs marked with a * require submission of an advance notification form to Louisiana Economic Development.

• Small Business Loan Program. Provides loan guarantees or loan participation to banks for small- and medium-size businesses to purchase fixed assets, equipment or machinery. Guarantees may be up to 75% of a loan up to $650,000 or up to 65% of a loan up to $2.3 million. Also provided is a loan participation of up to 40%.
• Business Linked Deposit Program. Provides for a 1% to 4% interest rate reduction on a maximum of $200,000 for a maximum of two to five years on term loans funded by banks to Louisiana businesses.
• Microloan Program. Provides guarantees for loans between $5,000 and $50,000 and is best suited to start-up and expanding small businesses that need a revolving line of credit for short-term working capital.
• Contract Loan Program. Provides a loan participation in conjunction with a loan guarantee to a bank for businesses that have a contract with a local, state or federal government entity for no more than one year.
• Ex-Im Bank City/State Program. LEDC has a relationship with the U.S. Export-Import Bank in Washington, D.C., serving as a loan facilitator for export loans for small- and medium-size Louisiana businesses.

• 7(a) Loan Guaranty. Provides short- and long-term loans to eligible, credit-worthy startup and existing small businesses that cannot obtain financing on reasonable terms through normal lending channels. The SBA provides financial assistance through its participating lenders in the form of loan guaranties, not direct loans. Loans under the program are available for most business purposes, including purchasing real estate, machinery, equipment and inventory, or for working capital.
• SBA 504 Loan Program. Provides long-term, fixed-rate financing on a low down payment to small businesses to acquire real estate, machinery or equipment to expand or modernize. Typically, a 504 project includes a loan secured with a senior lien from a private sector lender covering up to 50% of the project cost, a loan secured with a junior lien from the CDC (backed by a 100% SBA-guaranteed debenture) covering up to 40% of the cost and a contribution of at least 10% equity from the small business being assisted. The business must have a net worth of less than $7 million and net profit under $2.5 million.
• Community Express Pilot Loan Program. This program is targeted to New Markets small businesses owned by minorities, women and veterans. Approved lenders are allowed to use streamlined and expedited loan review and approval procedures to process SBA guaranteed loans from $5,000 to $250,000.
• 7(m) Microloan Program. Provides loans from under $500 to $35,000. Funds are made available to nonprofit intermediaries that make loans directly to entrepreneurs.
  NOTE: Neither LED nor the SBA provide grants for business startups.

Louisiana Technology Park
The Louisiana Technology Park in Baton Rouge provides a $4,000 grant for companies that are accepted into its incubator program. The money can be used to buy new equipment, pay off debt, or for employee compensation. This grant opportunity is open to any technology-oriented, emerging company accepted into the Louisiana Technology Park. Incubator residents also benefit from highly subsidized rent (which also includes office furniture, high-speed Internet access, utilities, phones and professional coaching) and less expensive overhead.

LED Microenterprise Program
LED's Microenterprise Development Program provides access to starting capital, economic literacy training, mentoring and financial counseling to entrepreneurs in underserved urban and rural populations. Call LED at (225) 342-4320 or visit one of the centers below.

Lake Charles
Southwest Louisiana Partnership for Economic Development
1011 Lakeshore Drive, 7th Floor
Lake Charles, LA 70601
(337) 721-4100

Monroe
Southside Economic Development District
712 Winnsboro Road
Monroe, LA 71202
(318) 325-9090

New Orleans
UNO Small Business Development Center
2 Canal St., World Trade Center, Ste. 2926
New Orleans, LA 70130-1507
(504) 568-8222

Shreveport
Shreveport-Bossier African American Chamber
1315 Milam St.
Shreveport, LA 71101
(318) 459-1440

USDA Rural Development
This program of the U.S. Department of Agriculture has several business programs that help create jobs and stimulate rural economies by providing financial backing for rural businesses. Loans, grants, and loan guarantees are available to any legally organized entity, including cooperatives, partnerships, profit or nonprofit entities, Indian tribes or federally recognized tribal groups, and municipalities. Branch offices are located throughout the state.

Federal SBIR program
The Small Business Innovation Research program is a competitive award program for small business concerns to engage in research and development that has the potential for commercialization. Federal agencies participating in the SBIR program include the USDA, DoD, Homeland Security, EPA, NASA, NSF, and others. For assistance with proposals in Louisiana contact the Louisiana Business & Technology Center, Roy Keller or Bryan Greenwood, (225) 578-7555, or the Ark-La-Tex Export & Technology Center, Diana Simek, (318) 671-1050.

VENTURE CAPITAL

Louisiana Economic Development Corp.
As the administrator of LED's financial assistance programs, LEDC also makes venture capital investments to stimulate the flow of private capital. For more information on any of the following programs, contact LEDC at (225) 342-5675 or click on the link above.

• Venture Capital Match Program. This program provides for a fund-of-funds investment for Louisiana venture capital funds. The fund must have at least $5 million of private investment for which LEDC may provide up to a $5 million match investment.
• Venture Capital Co-Investment Program. This program provides for a co-investment of up to one-quarter of the round of investment not to exceed $500,000 with any qualified venture capital fund with at least $7.5 million in private capital. The venture capital fund may be from outside of Louisiana as long as the business receiving the investment is a Louisiana business.
• Minority Venture Capital Match Program. This program provides for a match investment for qualified minority venture capital funds. The fund must have at least $250,000 of private investment for which LEDC may invest $1 for every $2 of private capital up to $5 million.
• BIDCO Investment Program. This program provides for a match or co-investment in certified BIDCOs (Business and Industrial Development Corporations). The BIDCO must have at least $2 million in private capital. LEDC may match the investment $1 for $2 of private capital up to $2.5 million. Co-investments are done on a project-by-project basis.
• Specialty BIDCO Investment Program. This program provides for a match or co-investment in certified Specialty BIDCOs, established to focus on assisting disadvantaged businesses and businesses located in impoverished and economically disadvantaged areas. The BIDCO must have at least $250,000 in private capital.
• Seed Capital Investment Program. Assists in the development of a seed capital industry in the private sector to piggyback on Louisiana's growing venture capital industry.