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Direct Financial Incentives

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; and manufacturing. 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 assistance may be used to partially fund building, infrastructure improvements, fixed assets and leasehold improvements, feasibility studies, and up to $50,000 or 50 percent of the costs of preparing a local economic development plan. This capability includes the former One Maryland Program, which encourages the creation of needed infrastructure to promote the growth and attraction of new businesses into qualified distressed counties through the direct funding of projects identified in the local strategic plan for economic development. The uses of funds include acquisition and development of land for industrial sites, development of water and sewer lines, construction of shell buildings, and other infrastructure projects.

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. 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 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 investments. The financial assistance can be in the form of a loan, conditional loan, or grant. The rate of interest and terms are below market and are extended based on specific performance targets.

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. Insures 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-ED financing supports local initiatives through direct public improvements or loans to businesses. CDBG-ED funds promote economic activity and recovery in Maryland's smaller rural communities. 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):

• • Contract financing: Through its revolving loan fund, the MSBDFA makes loan guarantees and direct working capital and equipment loans (up to $500,000) to socially or economically disadvantaged businesspeople and businesses that are unable to obtain financing on reasonable terms through normal financing channels who have been awarded contracts mainly funded by government agencies and/or public utilities.
• • Equity financing: The Equity Participation Investment Program (EPIP) provides direct loans, equity investments, and loan guarantees to socially or economically disadvantaged-owned businesses and businesses that are unable to obtain financing on reasonable terms through normal financing channels in franchising, in technology-based industries, and for the acquisition of profitable businesses. EPIP funds (up to $500,000) can be used for practically any business purpose.
• • Loan guarantees: 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. The minimum loan is $5,000 for a period not to exceed 10 years, with a maximum interest rate of prime plus 2 percent.
• • 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 90 percent reimbursement to a surety for losses with a total exposure not to exceed $900,000. The program can issue bid, performance, and payment bonds directly of up to $750,000 to eligible contractors with government or public-utility-funded projects.

Capital investments:
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. The amount of the equity is up to $150,000 with an initial investment of up to $50,000. Additional investments are made based on performance and the achievement of specific milestones.

Enterprise investment provides direct equity investments in emerging high-technology companies with patented or proprietary products or manufacturing processes and a marketing strategy in place. The amount of the investment may range from $150,000 to $500,000 per enterprise.

Maryland Enterprise Venture Capital Limited Partnership Fund invests in private venture-capital limited partnerships with the understanding that each partnership will make its best efforts to invest in Maryland start-ups an amount equal to the amount invested by the department in the limited partnership.

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 uses include most business applications such as the acquisition of fixed assets, leasehold improvements, and working capital.

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 Industrial Training Program (MITP) targets new job creation and business retention through incentive grants for the development and training of new employees in firms locating or expanding their work force in Maryland. MITP reimburses companies for training. The level of funding provided is based on a number of factors including jobs created, level of wages/salaries, benefits packages, proposed location and rate of unemployment in the area, significance of the relocation or expansion to the Maryland economy, and utilization of other state and local resources.

Maryland's training professionals can also introduce grant recipients to a network of public and private resources for assistance in determining staffing and training needs, developing training plans, and obtaining effective and cost efficient training.

With businesses selecting their training providers, successful programs have been delivered through:
• • in-house instructors from participating companies;
• • Maryland community colleges;
• • four-year colleges and universities;
• • consultants;
• • product manufacturers and vendors;
• • industry trade seminars.

The Partnership for Workforce Quality (PWQ) targets training grants to manufacturing and technology firms to improve business competitiveness and worker productivity, upgrade employee skills for new technologies and production processes, and promote employment stability.

Through PWQ, the Department of Business and Economic Development assists businesses in developing formalized training programs. For qualifying companies that make a commitment to their training goals, PWQ will reimburse up to 50 percent of the direct costs related to the training projects. The training providers are selected by the business and typically include:
• • consultants;
• • in-house trainers;
• • product vendors;
• • manufacturers;
• • Maryland community colleges;
• • four-year colleges and universities;
• • trade associations.

PWQ initiatives include funding and technical assistance to individual company grant programs that offer customized, job-specific work-force training, quality management, professional development and modernization, and manufacturing process improvement.

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 Governor's Office of Business Advocacy assists companies in navigating through the processes and regulations of local, state, and federal government. The office makes Maryland a more business-friendly state by working with businesses and government to prevent roadblocks.

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.

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.

Maryland State Contact:
Maryland Department of Business & Economic Development
217 E. Redwood St.
Baltimore, MD 21202
(410) 767-6300 or (888) CHOOSE MD