Finance and Incentives

Economic Development Zones

Grants

Industrial Revenue Bonds

Loan Programs Central New York Enterprise Development Fund Central New York Quasi-Equity Fund GSBDC Revolving Loan Fund HUD Section 108 Job Development Authority Linked Deposit Pre-qualification Loan Program SBA 504 Small Business Technology Investment Fund Syracuse Economic Development Corporation Urban Business Opportunity Center

Sale/Leaseback Transaction

Sales Tax Exemption

Tax Management (PILOT)

Training

Grants
The Power for Jobs Program provides low-cost electricity for qualified businesses that expand or remain in New York and therefore help to further the State's revitalization.

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Industrial Revenue Bonds
Both the Onondaga County Industrial Development Agency and the Syracuse Industrial Development Agency issue tax-exempt or taxable industrial revenue bonds.

This financing offers the following advantages:

• Competitive interest rates.
• Versatile financing in that IDA issued bonds may finance up to 100% of a project or may be combined with equity, conventional financing, or public financing to create a well-rounded financial package.
• Cost-effective for borrowers of all sizes.

How the loan process works:

The IDA issues the bond but it does not actually loan the money directly to a company. Rather, a financial institution loans the funds to an applicant, through the IDA. Typically, a bank or an underwriter will purchase the bonds and in effect, make the loan. It is the responsibility of the company to discuss with lending institutions their interest in purchasing the Agency's bonds to finance a project. The lending institution reviews the project and makes the credit decision as to whether or not to purchase the bonds. In addition, the company and financial institution negotiate the terms and conditions of the loan (its length, interest rate, etc.) independently of the IDA. The bonds are secured by the financial strength and credit of the applicant. Normally, the loan is secured by a mortgage on the facility financed with the bonds. However, additional guarantees and collateral may be required by the lending institution similar to what may be the case in a conventional financing. This means that the IDA approval of a project does not automatically result in funding being available. The applicant is responsible for the repayment of the bonds. Neither the Agency, the County, nor the State guarantees any such indebtedness.

Federal tax law regulates tax-exempt bonds. The interest income on taxable bonds is exempt from State income tax only. In addition to the reduced interest rate on the bonds, and the IDA financed project is exempt from paying sales tax, mortgage recording tax, and is eligible for property tax abatements.

Projects of IDA are subject to application fees, legal costs, and administrative fees.

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Loan Programs
Central New York Enterprise Development Fund
The Central New York Enterprise Development Fund is a regional business loan program that was established in 1990. The program is managed by the Central New York Regional Planning and Development Board. Sponsors include local economic development corporations, the COMCO Development Corporation, and the Central New York Enterprise Development Corporation.

Eligible Projects
The goal of the Central New York Enterprise Development Fund is to support the growth of small manufacturing companies and service related businesses that will provide employment opportunities for local residents and bring new wealth and capital into the region.

Direct Loans
Working capital and fixed asset loans are available up to $100,000 or 50 percent of the project cost whichever is less.

Loan Guarantee
Are available for fifty (50) percent of commercial bank term loan or line of credit up to $160,000.

Term
Negotiated

Interest Rate
Negotiated

Fees
On direct loans, a $250 application fee plus actual closing costs.

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Central New York Quasi-Equity Fund
The Central New York Quasi-Equity Fund, or mezzanine type financing is designed to support the growth, start-up and retention of manufacturing and producer-service firms in the area.

Eligible Projects
Manufacturers and producer-service firms which derive most of their revenue from outside Central New York. The objective is the creation and retention of jobs.

Direct Loans
Maximum loan of $100,000. The fund regularly seeks other participants, which may increase the loan amount. Funds can be used for almost any purpose.

Term
Typical amortization period of 5-7 years with a typical term of 3-5 years.

Interest Rate
Average rate of return is approximately 20%. Monthly P&I payment are usually required, with a variable transaction fee payable at the end of term.

Collateral
The risk profile falls between venture capital funds and conventional financing. Loans will be undersecured or unsecured. Personal guarantees will be sought.

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GSBDC Revolving Loan Fund
The GSBDC Revolving Loan Fund (RLF) is a flexible loan fund available for the establishment of new businesses and the expansion of existing businesses within Onondaga County.

Eligible Projects
The GSBDC RLF seeks to fill financing gaps that exist in public and private funding sources by funding projects which will create an above average number of jobs and provide a clear and positive economic benefit to the community.

Eligible Businesses

• Any non-retail business that meets the objectives and criteria of the fund.
• Firms that manufacture a product or provide a service for sale outside the Greater Syracuse area are preferred.

Term
Tailored to each specific loan request and need, but generally commensurate with collateral provided.

Interest Rate
Usually fixed for term of loan. Rates will vary depending on loan type, purpose and market condition.

Lien Position
When participating with another lender(s), the lien position will usually be co-equal or subordinate. Personal guarantees are required.

Fees
An application fee of $250 is required and reimbursement of GSBDC legal fees. No other fees are usually charged.

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HUD Section 108 Program
The HUD Section 108 Program focuses on small and medium businesses, making fixed asset financing available for industrial and commercial users with a proven ability to expand and grow. The purpose of the program is to stimulate private sector investment and to retain and create permanent job opportunities for low to moderate income City and County residents.

Eligibility

• Healthy, expanding owner-user small or medium businesses seeking fixed-asset financing for land, construction/renovation or acquisition of machinery and equipment
• Businesses at least two-years-old and able to demonstrate sufficient profitability to amortize both the existing and the additional proposed debt service
• Minimum of 50% private sector participation from banks, financial institutions, and/or the small business concern
• Proceeds must be used to create jobs for low/moderate income people or to repair deteriorated buildings

Eligible Uses

• Acquisition of land, buildings, machinery and equipment and/or other fixed assets
• Rehabilitation of existing structures
• Site improvements
• New construction

Benefits

• Size: 50% fixed-asset of project cost
• Rate: Prime rate plus 1% until the HUD bonds close, then 1% over the HUD rate. The HUD rate is based on the Treasury rate at the time of closing.
• Term: Amortization schedules of 20 years

Additional Program Requirements

• For loans of $250,000 or less, application fee of $150.00 for each project and a refundable commitment fee of 1% of the requested HUD 108 loan are required.
• For loans over $250,000, a $150.00 fee for each HUD 108 project, plus a non-refundable 2% origination fee and a 1% refundable commitment fee when the loan is approved.

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Job Development Authority
The New York Job Development Authority (JDA) is a public benefit corporation of the State of New York. The JDA lends funds to local development companies such as the Greater Syracuse Business Development Corporation (GSBDC) for re-lending to eligible business concerns located in, or locating in, the State. The JDA direct loan program generally provides 40% project cost financing for expanding businesses that create or retain jobs.

Eligible Projects
The acquisition of land, buildings, machinery and equipment, building expansion and new construction are eligible.

Eligible Businesses
Most creditworthy businesses are eligible, with the exception of retail establishments, hotels and apartment buildings.

Loan Limits
Loans are normally limited to 40% of the project cost, up to a $1,500,000 maximum. A JDA loan cannot be subordinate behind more than 50% of the project cost. A 10% equity injection is required. A typical project consists of a financial institution lending 50% in a first mortgage position, JDA through the GSBDC providing 40% in a second or co-equal lien position and the business concern or principals injecting 10% loan equity.

Term

• Real estate: 10 to 20 years
• Machinery and equipment: 5 to 7 years
• The JDA loan is usually for the same term as the participating conventional loan.

Interest Rate
The interest rate to the borrower is determined by whether the firm is considered a manufacturer or not. For manufacturers, funds are derived from the sale of tax-exempt bonds which results in a below market rate. For non-manufacturers, funds are derived from the sale of taxable bonds, which results in a market rate. Funds are available on either a fixed or variable rate basis.

Lien Position
Normally, a JDA loan is secured by a second lien on real estate. On machinery and equipment, a co-equal lien with the financial institution is required. Personal guarantees are required. Key person life insurance may be required.

Prepayment
Most JDA loans have no prepayment penalty.

Fees
JDA charges total fees of 2% of the JDA loan amount. This consists of a $250 non-refundable application fee and the balance is payable upon JDA commitment. Closing costs are included in the 2% fee.

Other

• Seller-financed mortgages are allowed if subordinate to the GSBDC/JDA loan.
• A combination JDA/Industrial Development Bond project is allowed.
• If tax-exempt funds are used, an amount equal to 15% of the JDA loan proceeds must be used for eligible constructive rehabilitation if the project is for the purchase of an existing building or used machinery and equipment.
• For tax-exempt funds, no portion of the project may be leased to an unrelated party.

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Linked Deposit
Linked Deposit — Low-interest loans of up to $500,000 in a two-year period are available to manufacturers with 500 or fewer full-time employees, service businesses with 100 or fewer employees, businesses with 100 or fewer such employees located in an Economic Development Zone and minority-owned companies.

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Pre-qualification Loan Program
The Pre-qualification Loan Program was developed to promote the U.S. Small Business Administration (SBA) business loan programs to current and prospective small business owners. Greater Syracuse Business Development Corporation (GSBDC) assists prospective borrowers in developing a viable loan application package that can be submitted to the SBA for consideration of a loan pre-qualification. On approval, GSBDC can assist the applicant in locating a lender.

Eligible Projects
To be eligible for the Pre-qualification Loan Program, a business must be at least 51% owned, operated and managed by women, minorities or veterans. Also, businesses located in a rural area are eligible.

Eligible Businesses
Most types of businesses are eligible except for projects held primarily for investment, gambling, speculation, newspapers and non-profit organizations. All 20% owners of the business have to pass a personal resource test.

Loan Limits
Loans under this program are limited to amounts of $250,000 or less.

Term
Length of time for repayment depends on the ability to repay, and the use of the loan proceeds. Generally, loan maturities will be between five and ten years for working capital loans; up to 10 years for machinery and equipment; and up to 25 years for real estate, construction or the purchase of equipment with a useful life of 25 years.

Interest Rate
Applicants negotiate terms with the lender. Interest rates are tied to the prime rate and may be fixed or variable; however, they cannot exceed the following maximums established by the SBA: for loans of less than seven years, up to 2.25% over prime; for loans of seven years or longer, up to 2.75% over prime. (Loans under $50,000 may be subject to slightly higher rates.)

Collateral

• Primary criteria for a pre-qualification are the ability to repay, a good business plan, and good credit. Normally, business assets will be pledged and personal assets when warranted.
• All owners of 20% or more of the business are required to personally guarantee the note.
• The applicant must have a reasonable equity stake in the business.

Fees
There is a one-time application fee paid to GSBDC of up to $400 for this program. Additional SBA and bank fees will be applicable if a loan is actually funded.

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SBA 504
The SBA 504 loan program is designed to provide long-term, below market, fixed-rate second mortgage money for expanding businesses. The SBA 504 loan program is normally used in conjunction with conventional bank financing to provide up to a total of 90% project cost financing. Funds are available through the Greater Syracuse Business Development Corporation (GSBDC) for projects in Onondaga, Madison, Cortland and Cayuga counties.

Eligible Projects
Owner-occupied projects should create or retain jobs or meet a community or national objective. The acquisition of land, buildings, machinery and equipment, building expansion and new construction qualify for funding. Under some circumstances leasehold improvements may be eligible. Most related soft costs are eligible, such as surveying, engineering, appraisals, environmental audits, architectural, legal, accounting and construction period interest.

Eligible Businesses
The business concern must be creditworthy and eligible as a small business as defined by the U.S. Small Business Administration (SBA). Generally, a business is "small" if it has a tangible net worth under $6,000,000 and does not have average net income over $2,000,000 during the last two years. Most types of businesses are eligible except for projects held primarily for investment, limited-use facilities, airplanes and newspapers. Owners of the business may also have to pass a personal resource test. Please consult GSBDC for details.

Loan Limits
Normally 40% of the project cost can be covered, up to a maximum SBA 504 loan amount of $1,000,000. In certain cases, up to 48% of the project may be funded with SBA 504 funds. In all cases 10% must be injected as equity by the business concern or principals. A typical project ranges in size from $200,000 up to $2,500,000 and consists of a financial institution lending 50% in a first mortgage position, GSBDC providing 40% in a second position and the business concern or principals injecting 10% equity. Larger projects may also be eligible.

Exceptions to the above are as follows: When an applicant is either a start-up business (defined as two- years-old or less) or the collateral is special purpose/limited use, the minimum equity is 15%, or 20 % if both a start-up and of limited use. In these situations, the financing structure would be either 50/35/15 or 50/30/20.

Term

• Ten years—Machinery and Equipment
• Twenty years—Real Property

Interest Rate
Interest rates are fixed and established at the SBA 504 loan closing. The rate (inclusive of all servicing fees) to the applying business concern is usually 2.75% over five or ten-year treasury notes and is typically .5% under market rates.

Lien Position
The SBA 504 loan program is normally a second mortgage or security interest in real estate and/or machinery and equipment. Personal guarantees are required. Key person life insurance may be required.

Prepayment
Prepayment is only allowed in full. A prepayment penalty will apply during the first half of the loan term.

Fees
Fees consist of 2.75% of the SBA 504 loan amount and are financed 100% and added to the 504 note. GSBDC legal fees are extra, and are payable by the borrower at the permanent mortgage closing.

Other

• Some SBA 504 mortgages through GSBDC are exempt from mortgage taxes. Therefore, savings of 1% of the SBA 504 loan amount may be available.
• Seller-financed mortgages are allowed if subordinate to the GSBDC/SBA 504 loan.
• On new construction, up to 20% of the building may be leased to another tenant.
• If purchasing an existing building, the applicant must occupy 51% of the space. The balance may be leased as long as no proceeds of the 504 loan are used to remodel or convert the rental space.

Phase I environmental audits are usually required for realty projects.

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Small Business Technology Investment Fund
The Small Business Technology Investment Fund provides access to capital for New York's Start-up High Technology Companies. The Fund arranges debt and equity investments and offers technical and managerial services to growing technology-based business ventures.

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Syracuse Economic Development Corporation
Syracuse Economic Development Corporation, (SEDCO), is a private not-for-profit corporation established in 1979 to facilitate public/private development ventures in the City of Syracuse. This program provides low-cost, Fixed-asset financing for business development throughout the City of Syracuse.

Eligible Businesses

• Healthy and expanding commercial, retail, or industrial firms
• 50% private sector funding including 10% equity participation
• creation of at least one job within three years for every $10,000 of SEDCO funds
• minimum of 51% of the jobs created or retained must be available to, or held by, low/moderate-income persons

Eligible Uses

• Acquisition of land, buildings, machinery and equipment, and other fixed assets
• Rehabilitation of existing structure
• Site improvements
• New construction

Benefits
The SEDCO Loan program can provide the following benefits on projects where SEDCO is the sole public financing source:

• Size: 50% fixed asset financing of up to $50,000.
• Term: 5 to 20 year term.
• Rate: 6% fixed.

Additional Requirements

• Application fee of $25.00 is due upon submittal of application.
• Commitment fee of 1% of loan amount refundable upon closing.
• Legal/closing costs will be determined upon closing.

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Urban Business Opportunity Center
The Urban Business Opportunity Center (UBOC) is designed to provide economic opportunity and promote the creation, development and retention of small businesses throughout the City of Syracuse. A special focus of the center is to increase the participation of minorities, women and other individuals who otherwise would not be able to pursue self-employment or small business opportunities in the City of Syracuse. A ten-week entrepreneurial training program is offered twice a year where participants learn basic business practices and prepare a business plan.

The UBOC Program is under the supervision of the Department of Community Development/ Office of Economic Development and the loans are made through the Syracuse Economic Development Corporation (SEDCO).

Eligibility

• Businesses that demonstrated financial need
• Businesses that demonstrate the ability to operate a business successfully
• Completion of business management skills course offered through the center
• Completed business plan

Eligible Uses

• Start-up or expansion of small businesses as needed and approved by SEDCO

Benefits

• Size: $10,000 maximum
• Rate: Not to exceed 8%
• Term: 5 to 7 years

Additional Requirements

• Application fee of $25.00 due upon submittal of application.
• Commitment fee of 1% of loan, refundable upon closing.
• Legal/closing determined upon closing.
• An executed management assistance agreement with UBOC.

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Sale/Leaseback Transactions
Both the Onondaga County Industrial Development Agency and the Syracuse Industrial Development Agency offer sale/leaseback transactions.

In a sale/leaseback transaction, title to the project is conveyed to the Agency but no bonds are issued by the agency. The agency then enters into a lease or sale agreement with the company for the project. The agency agrees to grant mortgages on and security interests in the project in favor of lenders on behalf of the company to secure the loans necessary to build or equip the facility.

The purpose of this type of transaction is to make the tax management capabilities of the agency available to a project without including the agency in the financing for a project if such inclusion only results in a more complex and expensive transaction. Title to the project will be reconvened to the company at an agreed to date, usually upon completion of construction of a non-manufacturing facility and at the end of the payment in lieu of tax (PILOT) agreement for a manufacturing facility.

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Sales Tax Exemption
Qualified projects of the IDA are eligible for state and local sales tax exemption for nearly all tangible personal property and services used in the building and operation of a business.

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Tax Management(PILOT)
Payment in Lieu of Tax (PILOT) programs are offered by both the Onondaga County Industrial Development Agency (OCIDA) and the Syracuse Industrial Development Agency (SIDA). Although similar in function, the OCIDA and SIDA operating practices differ slightly:

Onondaga County Industrial Development Agency
Qualified projects of the OCIDA are eligible for real property tax exemptions. The direct payment in lieu of tax (PILOT) is an agreement between the Company and the Agency that contains a scheduled payment plan based on current tax rates and a mutually agreed project value. The PILOT is based on a graduated schedule of abatements applicable to new improvements with a typical term of 10 years. The abatement following the first year after completion of a project is 50%, with succeeding years decreasing by 5% per year for a ten-year average net abatement of approximately 27%.

Eligibility

• New Construction, expansion, or acquisition and substantial renovation of manufacturing, manufacturing support, warehouse/distribution, or transportation facilities that will create new employment opportunities or retain existing jobs and create net wealth in the County generally qualify for direct PILOT agreements.

Benefits

• Direct agreement between company and Agency
• Ten-year scheduled payment plan
• Mutually agreed project value
• First year abatement of 50%
• Ten year average net abatement of 26%

Syracuse Industrial Development Agency
Qualified projects of the SIDA are eligible for real property tax exemptions. The direct payment in lieu of tax (PILOT) is an agreement between the Company and the Agency that contains a scheduled payment plan based on current tax rates and the value of property improvements as determined by the City. The PILOT is based on a graduated schedule of abatements applicable to new improvements with a typical term of 10 years.

Exemptions
Six classes of exemptions are available:

1. Eligible construction or rehabilitation projects located in a New York State designated Economic Development Zone
   
   
2. Eligible construction or rehabilitation projects directly related to manufacturing or processing uses
   
   
3. Eligible projects not defined under class 1 or class 2 above, involving rehabilitation or existing vacant structures
   
   
4. Eligible construction or rehabilitation projects not defined under class 1, 2 , or 3 above
   
   
5. Eligible projects located within the Franklin Square Development Area (request current copy of Franklin Square Development Area exemption policy)
   
   
6. Eligible brownfield projects (request current copy of SIDA brownfield exemption policy)

Percent Exemption by Year and Class
Year	Class 1	Class 2	Class 3	Class 4
1	100	80	60	50
2	100	75	55	45
3	100	70	50	40
4	100	65	45	35
5	100	60	40	30
6	100	50	35	25
7	100	40	30	20
8	75	30	25	15
9	50	20	20	10
10	25	10	10	5
11+	0	0	0	0

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