Incentives: Financing Options

Business in Our Sites

Business in Our Sites offers flexible loans and grants for local municipalities and their economic development partners to create future business growth and attract opportunities through the acquisition and preparation of key sites for development.

Building PA

Building PA provides funding for the development of real estate assets within the Commonwealth. Funds will be loaned to experienced private sector real estate funds that will raise matching funds and invest in projects throughout the Commonwealth.

New Pennsylvania Venture Guarantee Program

This program allows the Commonwealth to more actively partner with the investment community by structuring a program that provides guarantees to venture capital companies interested in investing in Pennsylvania businesses. These guarantees will provide increased capital for Pennsylvania businesses to grow and create jobs.

New Pennsylvania Venture Capital Investment Program

The New PA Venture Capital Investment Program provides capital to Pennsylvania-focused venture capital companies that agree to match those funds and make investments in Pennsylvania businesses. At least 50% of the money must be invested in underserved areas of Pennsylvania.

First Industries Fund

Agriculture and tourism are two of Pennsylvaniaís largest industry segments. Historically, the Commonwealth has provided little in the way of financial incentives to owners of tourism-related businesses or assisted farmers with their capitalization or working capital needs. First Industries provides grants and low-interest loans for these important industry sectors.

2nd Stage Loan Program

2nd Stage provides guarantees for bank loans to second stage manufacturers and technology companies for working capital and other financing needs. Targeted toward manufacturing, advanced technology, and biotechnology, these funds support growth in these vital sectors.

Tax Increment Financing (TIF) Guarantee Program

TIF has been a significant financing tool for the Commonwealth for many years. Through TIF financing, communities can borrow funds for projects that will develop blighted areas and then repay those borrowed monies through the incremental tax revenues that will be generated as a result of the development. While this method of financing has been used extensively by the state’s largest cities, smaller communities have not tapped into the potential of TIF financing. In order to solve this disparity, a combination of technical assistance and loan guarantee assistance is proposed to encourage small and mid-sized communities to utilize this method of financing projects.

Infrastructure & Facilities Improvement Program

This is a multi-year grant program that will provide grants to certain issuers of debt in order to assist with the payment of debt service. The grants will be based upon incremental state tax revenue that will result from the development of new infrastructure. The funds are targeted to manufacturing, hospital, large retail, and convention center projects.

These programs join components that were part of the 2003-2004 budget or that were signed into law by Governor Rendell in February 2004.

Elm Street

The Elm Street program builds on the success of the Main Street program in transforming the core areas of a community. By providing $5 million in funding, the Elm Street program will encourage improvements to residential communities that are located in proximity to commercial corridors. This funding can be used to upgrade the physical infrastructure such as streetscapes, sidewalks, and lighting as well as improving housing facades and exterior repairs.

Main Street

The Main Street program has been a successful model to assist small towns and cities to revitalize their central business district. The stimulus effort includes a doubling of this program. The program supports creation of a local organization and some physical improvements to the downtown structures that make Main Streets more attractive business locations.

Keystone Innovation Zones

Keystone Innovation Zones (KIZs) are designated zones that may be established in communities that host institutions of higher education. These zones are designed to foster innovation and create entrepreneurial opportunities. By bringing together education, community and economic development initiatives, local municipalities and businesses can focus on creating an environment to support company growth and formation.

Expanded Research and Development Tax Credit

Research and new product development are cornerstones to broader economic growth. From manufacturing to drug discovery, the Commonwealth can be an active agent in stimulating both academic and private research as well as moving the fruits of that research into the marketplace. The increase of the R&D tax credit to $30 million from $15 million and allowing credits to be traded will help.

Core Industries

The Core Industries program will enhance the successful Machinery and Equipment Loan Fund (MELF) by adding an additional $75 million in revolving loan funds and by increasing the maximum loan amount from half a million to five million dollars. Twenty-five million dollars will be targeted to aid hospitals with the purchase and installation of FDA required pharmaceutical management technology.

The Base Retention and Conversion

The Base Retention and Conversion program includes $1.25 million provided for BRAC-related activities to be used for the development of a statewide strategy and grants for economic impact and other studies, as well as development activities, associated with individual military bases in Pennsylvania. This initiative is designed to assist local defense organizations in protecting the 60,330 active, reserve and National Guard positions within the Commonwealth that are at risk because of the BRAC process in 2005.

Section 108 (HUD) Loan Pool

The Section (HUD) 108 Loan Pool enables small and mid-size communities to access loan funds for economic development, community facilities, participating in the Community Development Block Grant (CDBG) program to obtain federally guaranteed loans to fund large economic development projects and undertake revitalization activities. Under Pennsylvaniaís initiative to use HUD 108 the loans are guaranteed by the Commonwealth, committing the use of future CDBG funds to pay off the loan in case of default.

Homeownership Choice Program

The Homeownership Choice Program (HCP) is an incentive program of the Pennsylvania Housing Finance Agency (PHFA). This program finances new, single-family home construction in blighted urban areas of the Commonwealth. It creates more opportunities for families to own their own home, ultimately transforming neglected neighborhoods into better places to live and work.

Housing & Redevelopment Assistance

DCED provides assistance for housing and redevelopment through this funding source. The program provides the most flexible funding available to cities and smaller urban areas in order to revitalize downtowns, older industrial areas and commercial sites. This funding source also provides affordable housing.

For information on the economic stimulus package and its components, please visit the Department of Community and Economic Development Web Site at www.newPA.com, or call 1-866-GO-NEWPA (1-866-466-3972).