Industrial revenue bonds:
Industrial revenue bonds provide manufacturers with competitive financing. Interest on tax-exempt issues, which is normally 80 percent of prime, may vary depending on terms of the issue.
The primary goal of industrial revenue bonds is to enable manufacturers to purchase land, buildings and equipment to expand their operations. In addition to tax-exempt bonds, taxable industrial revenue bonds may be used for distribution facilities and company headquarters at long-term fixed rates and for manufacturing projects that exceed $10 million in capital costs or do not meet other federal guidelines relative to tax-exempt bond financing.
Businesses that use either tax-exempt or taxable industrial revenue bond financing can negotiate with the local community for a payment in lieu of property taxes.
Industrial revenue bond guarantees:
Arkansas's Bond Guaranty Program helps companies that have a financial history but are unable to sell industrial revenue bonds to the public by providing a credit enhancement. Bonds can be sold at a higher credit rating, thus lowering the effective interest rate for the company. Bondholders are assured of payment up to $5 million of a bond issue. For larger projects, the Arkansas Economic Development Commission (AEDC) can partner with the Arkansas Development Finance Authority (ADFA), a statewide issuer, which has a similar bond guaranty program, to guarantee up to $11 million when combined. The Commission and ADFA charge a five percent fee for guaranteeing Industrial Revenue Bonds.
Community Development Block Grant Program:
The Arkansas Economic Development Commission (AEDC) administers the federally funded state Community Development Block Grant Program (CDBG) for Arkansas. CDBG funds may be loaned to manufacturers for fixed-asset financing on projects that create jobs for low- to moderate-income families. Examples of eligible activities for this set-aside loan program include acquisition of property, purchase of equipment, leasehold improvements, and construction or expansion of buildings or physical plants.
Arkansas Capital Corporation:
The Arkansas Capital Corporation (ACC) is a privately owned, nonprofit organization that serves as an alternative source of funding of Arkansas companies. As a preferred lender for the Small Business Administration, ACC makes loans to existing operations and business start-ups for everything from new construction and equipment to working capital. ACC loans may be issued in combination with bank loans, municipal bond issues, or other sources of financing.
Diamond State Ventures is a venture capital fund that provides patient capital for small businesses in Arkansas. Capitalized by investors from the banking community, private corporations, individuals and state government, this Arkansas-based fund can syndicate capital raises up to $20 million. Diamond State Ventures is a licensed Small Business Investment Company with the U.S. Small Business Administration.
The Arkansas Certified Development Corporation is a private, nonprofit, statewide provider of SBA 504 loans, which offer long-term, low down payment, reasonably priced, fixed-rate financing to start-up and healthy, expanding, small- to medium-sized businesses that have the highest probability of successfully creating new jobs and competing in the world marketplace.
The Arkansas Economic Acceleration Foundation promotes entrepreneurial development through a series of initiatives, including the Donald W. Reynolds Governor's Cup collegiate business plan competition, which has one of the largest prize pools in the nation; the Arkansas Venture Forum, which promotes establishment of venture capital industry in Arkansas; and Techpreneur, which promotes establishment of technology enterprises.
Tax increment financing:
Local governments in Arkansas can issue bonds or notes to finance improvements in a redevelopment district. The bonds will be paid back from the increased tax revenue generated as a result of the improvements. A redevelopment district must be in an area that is considered blighted, deteriorated or underdeveloped.