Maryland Economic Development Assistance Authority and Fund (MEDAAF):
There are five financing capabilities offered through this MEDAAF program. The assistance is provided to the business community and political jurisdictions with a variety of funding alternatives. To qualify for assistance from MEDAAF, all applicants are restricted to businesses located in a priority funding area and eligible industry sectors. Eligible industry sectors include agriculture and forestry; aerospace; biotechnology; transportation, distribution, and warehousing; environmental technology; financial services; healthcare technology and services; telecommunications; manufacturing; information technology and businesses with U.S. or regional headquarters located or to be relocated in Maryland. The specific capabilities are as follows:
Significant strategic economic development opportunities: Normally regarded as a project that causes a significant economic development opportunity on a statewide or regional level. Assistance is provided in the form of a loan. The low-interest loan can be used for land acquisition, infrastructure improvements, buildings, fixed assets, leasehold improvements, and working capital.
Local economic development opportunity: The project is to be sponsored by the governing body of the jurisdiction in which the project is located and the local jurisdiction must participate in the form of either a guarantee acceptable to the department, a direct loan, or a grant in an amount equal to at least 10 percent of the state's financial assistance. Assistance can be provided in the form of a loan, a conditional loan, or a grant. The low-interest loan can be used for land acquisition, infrastructure improvements, building, fixed assets, and leasehold improvements.
Direct assistance to local jurisdictions or the Maryland Economic Development Corporation (MEDCO) may be in the form of a loan, a conditional loan, or a grant. The total amount of the assistance cannot exceed $3 million. The use of funds includes land acquisition, infrastructure improvements, acquisition of fixed assets, leasehold improvements, up to 70 percent of the cost of a feasibility study, and up to 50 percent of the cost of preparing a local economic development strategic plan.
Regional or local revolving-loan fund provides incentive grants to local jurisdictions to help capitalize local revolving-loan funds. Each jurisdiction may receive a grant of up to $250,000 annually. To qualify for a grant, the local government must provide a matching grant of funds to the local revolving fund. The approved use of funds and respective terms of the assistance are set by the local revolving-loan fund programs. Financial assistance provided by the local RLF may be in the form of a loan, loan guarantee, or an interest rate subsidy, which is commonly referred to as a linked deposit (not subject to eligible industry sector requirements).
Special purpose loans: This category targets specific funding initiatives that are deemed critical to the state's economic health and development by the state legislature. The special purpose initiatives include such activities as brownfields, seafood and aquaculture, animal waste, arts and entertainment, and daycare (not subject to eligible industry sector requirements).
Economic Development Opportunities Fund (Sunny Day):
The purpose of the fund is to promote Maryland's participation in extraordinary economic development opportunities that provide significant returns to the state through creating and retaining employment as well as the creation of significant capital investment. Financial assistance can be in the form of a loan, conditional loan, or grant. A Sunny Day project is defined as an extraordinary economic development opportunity by the following criteria:
• The recipient must maintain a strong financial condition and a minimal risk profile
• The recipient is capable of accessing alternative sources of financing through financial institutions or capital markets
• Minimum of 5:1 capital investment by the recipient for each $1.00 of Sunny Day funds
• The recipient's project is consistent with the strategic plan of the state for economic development
• The recipient creates or retains substantial employment, particularly in areas of high unemployment.
Additionally, the local jurisdiction is required to participate by providing any one or a combination of the following: a loan, a conditional loan, a grant, an in-kind contribution, job training funds, tax credits, tax increment financing, or below market contributions.
Maryland Industrial Development Financing Authority (MIDFA):
• MIDFA stimulates private-sector financing of economic development by issuing bonds, providing credit enhancements and linked deposits that increase access to capital for small and mid-sized companies. The fund does not provide direct loans, but insures transactions resulting in reduced credit risk, and issues taxable and tax-exempt bonds. In addition to credit-risk assessment, consideration is given to the project's economic impact. The fund charges an annual one eighth of 1 percent bond-issuance fee and if insured, a one half of 1 percent annual insurance premium.
• Conventional Loan Program: Insures transactions made by conventional and asset-based financial institution for working capital, fixed assets, letters of credit, leasing, and other related activities. Insures up to 80 percent of the obligation (90 percent for exporting) to a maximum insurance of $2.5 million.
• Taxable and tax-exempt bonds: Issues and/or insures bonds with financial institutions, counties, municipalities, industrial development authorities and other public bodies for fixed assets and certain working capital. Federal law restricts the issuance of tax-exempt bonds to not-for-profits, manufacturers, and special-use ventures involved in the development of solid-waste and energy-related projects. Bond programs insure up to 100 percent of the obligation to a maximum insurance of $7.5 million.
• Linked deposits: Can provide a below-market certificate of deposit to banks as a funding source for below-market-rate loans in certain economically distressed rural areas. The certificate of deposit is the funding source but is not collateral to the loan.
Community Development Block Grant for Economic Development Program:
The Community Development Block Grant for Economic Development (CDBG-ED) Program, created and funded by the federal government, provides assistance to Maryland's nonurban counties and municipalities for a variety of economic development activities. CDBG funds promote economic activity and recovery in Maryland's smaller rural communities; the project must create employment or eliminate slum and blight conditions. The program disperses funds to a local jurisdiction in the form of a conditional grant and then it is used for public improvements or loaned to a business. Some examples include real property acquisition, building construction or renovation, public infrastructure in support of new industry, planning grants, and many other projects that create jobs and contribute to the state's economy.
Maryland Small Business Development Financing Authority (MSBDFA):
This program provides financing for small businesses that are not able to qualify for financing from private institutions or owned by socially and economically disadvantaged persons.
• Contract financing: Through its revolving loan fund, the MSBDFA makes loan guarantees and direct working capital and equipment loans up to $1,000,000 to businesses that are unable to obtain financing on reasonable terms through normal financing channels.
Equity financing: The Equity Participation Investment Program (EPIP) provides direct loans, equity investments, and loan guarantees - up to $1,000,000 - in franchising, technology-based industries, or for the acquisition of profitable businesses.
Guaranty Fund Program: The Long-Term Guaranty Program assists eligible firms through guarantees and interest rate subsidies for loans to be used for working capital, the acquisition of machinery or equipment, and acquisition and improvements to real property to be used by the applicant's business. Loan guarantees may not exceed the lesser of 80 percent of the loan or $1,000,000.
Surety bonding: The Maryland Small Business Surety Bond Program assists contractors in obtaining bonding for government or public utility contracts that require bid, performance, and payment bonds. The authority can guarantee up to the lesser of 90 percent reimbursement to a surety for losses with a total exposure not to exceed $1,350,000. The program can directly issue bid, performance, and payment bonds directly of up to $5,000,000 to eligible contractors with government or public-utility-funded projects.
The Maryland Venture Fund provides several programs whose purpose is to provide emerging high-technology businesses access to early-stage capital.
Challenge Investment Program:
This incentive provides capital investments for small start-up companies to cover a portion of the initial costs associated with bringing a new product to market. An initial investment of up to $50,000 is made. Additional investments are made in increments to a maximum of $150,000 based on performance and the achievement of specific milestones
Enterprise Investment Fund Program:
Enterprise investment provides direct equity investments in emerging technology usually at the first round of institutional financing and works with emerging companies to move them into their next stage of development as a viable business. The amount of the investment may range from $150,000 to $500,000 per enterprise.
Day care financing programs:
The Day Care Facilities Loan Guarantee Fund can be used to guarantee loans for construction, renovation, purchase of equipment and supplies, and working capital. The scope of the program includes the expansion and development of day-care facilities for infants, preschool-aged children, children in need of before- or after-school care, the elderly, and persons with disabilities of all ages throughout the state.
The Child Care Facilities Direct Loan Fund is used for the construction, renovation, or acquisition of real property, fixtures, or equipment related to day-care facilities. The fund can also finance leasehold improvements in day-care facilities located in leased premises, provided the lease is for a minimum of 10 years.
The Child Care Special Loan Fund makes small loans to child-care providers for a variety of specific uses, excluding the purchase or construction of real property or buildings or major improvements to real property. Loans range from $1,000 to $10,000.
Maryland Economic Adjustment Fund:
Maryland Economic Adjustment Fund (MEAF) assists small business entities in the state to modernize manufacturing operations, develop commercial applications for technology, or explore and enter new markets. The program is administered in accordance with the guidelines imposed by the federal government's Economic Development Act (EDA). Businesses must be in a state-designated jurisdiction. The maximum amount of the loan to any one borrower is $500,000. (The DEA provides up to $1,500,000). The uses include most business applications such as the acquisition of fixed assets, leasehold improvements, and working capital.
Other business resources:
Regional offices of the Maryland Department of Business and Economic Development promote business growth through programs and services to aid business expansion, improve worker productivity, and encourage innovation in products and processes that enhance the competitive position of Maryland companies.
Regional networks coordinate business services offered through state and local economic programs, state and federal research and development facilities, business incubators, Small Business Development centers, manufacturing and engineering consultants, marketing representatives, and other public- and private-sector organizations.
Work force resources:
The Maryland Job Service and Local Employment Training offices throughout Maryland provide recruitment and job training assistance. Employment Training offices also perform client screening for all job creation and hiring tax credits available from the state and federal governments.
The Maryland ISO Consortium Program helps bring Maryland establishments into compliance with the International Organization for Standardization's guidelines for quality-management systems. The Consortium Program assists companies that are planning to pursue ISO certification as well as those wishing to utilize ISO standards to improve and document their processes without pursuing formal registration.
The Maryland World Class Manufacturing Consortium addresses a growing international demand by original equipment manufacturers (OEMs) for their suppliers to meet world-class manufacturing standards. Maryland's consortium takes member companies through a series of training and implementation strategies designed to help manufacturers reach world-class status in their industries.
Licensing and regulatory assistance:
The Maryland Business Licensing Information System (BLIS) is a website that gives users valuable information on licenses and permits issued by Maryland state agencies. The website is also designed to help determine which state licenses and permits may be needed to operate a business in Maryland. BLIS saves users time and money by providing most state licensing and permitting information in one location.
Maryland State Contact:
Maryland Department of Business & Economic Development
401 E. Pratt Street
Baltimore, MD 21202
(410) 767-6300 or (888) CHOOSE MD
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.