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Pennsylvania Direct Financial Incentives

Pennsylvania's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment.

Q1 2014
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Keystone Innovation Network (KIN)
KIN is a competitive grant program supported by the Ben Franklin Technology Development Authority (BFTDA). The KIN leverages prior state investments in established local and regional innovation assets — The KIN seeks partnerships, improved performance and competition while creating closer collaboration and support for eligible companies and universities. Services include the acceleration of technology commercialization, the development of technology transfer infrastructure, the leveraging of university research faculty and intellectual property, tax incentives, funding and other supportive services that foster growth in companies and the communities where they are established.

Keystone Innovation Zone Tax Credit Program (KIZ)
This program provides tax credits to early-stage, technology-oriented businesses and entrepreneurs operating in a Keystone Innovation Zone (KIZ); companies without a tax liability may sell tax credits to companies with tax liabilities for cash. Funding provides tax credits for companies that have been in operation less than eight years, whose gross revenues have increased over the previous year, are located in a KIZ Zone and that fall under the industry sector focus.

Keystone Opportunity Zones (KOZ)
The program provides state and local tax abatement to businesses and residents locating in one of the 12 designated zones. Businesses, property owners and residents that are located in a KOZ are eligible to receive significant state and local tax benefits. Projects in KOZ are given priority consideration for assistance under various community and economic building initiatives.

Pennsylvania businesses relocating to a KOZ must either: Increase their full-time employment by 20 percent within the first full year of operation, or make a 10 percent capital investment in the KOZ property based on their prior year’s gross revenues. Eligibility for benefits is based upon annual certification. In order to receive benefits, any entity applying must be compliant with all local and state taxes and building and zoning codes. Zone Acreage range up to 5,000 acres and each zone is comprised of parcel-specific sub-zones in various sizes.

Keystone Special Development Zone (KSDZ)
The KSDZ program was established for the purpose of providing incentives to for-profit businesses with tax credits for locating and redeveloping in former industrial and commercial sites. Tax credits are used to offset various business tax liabilities.

Life Science Greenhouses
Three regional Greenhouses are the only state organizations focused exclusively on growing the life sciences sector in Pennsylvania by creating new companies, investing in emerging companies, accelerating transfer of new discoveries from labs to companies and building collaborations between academic, entrepreneurial, corporate, financial and government partners. Greenhouses also develop and attract CEO talent to create and grow PA-based companies. Equity investments or loans are made to seed and early-stage companies within competitive bioscience sectors: new therapeutics, biomedical devices, drug delivery systems, platform technologies, bionanotechnology applications and bioinformatics.

Local Share Assessment Fund (LSA) - (Gaming Funds)
The PA Race Horse Development and Gaming Act (Act 2004-71) as amended has established the Pennsylvania Gaming Local Share Account under the Commonwealth Financing Authority (CFA) for the purpose of distributing 2 percent of gross terminal revenues of certain licensed gaming facilities in an orderly and timely fashion to support and enhance community and economic well-being and mitigate the impact of gaming and related activities.
  • Luzerne County: All Luzerne County municipalities are eligible for funding under this program.
  • Monroe County: The following five counties contiguous to Monroe County including: Carbon, Lackawanna, Northampton, Pike and Wayne.
  • Washington County: All of Washington County, economic development authorities within Washington County, and redevelopment authorities within Washington County.
    * Washington County is not under the Commonwealth Financing Authority (CFA).
Machinery and Equipment Loan Fund (MELF)
The Machinery and Equipment Loan Fund (MELF), which is administered by the Department of Community and Economic Development (the Department), is designed to stimulate the growth and assist in the retention of Pennsylvania businesses. The program provides low-interest loan financing for a portion of the cost of machinery and equipment purchases to eligible businesses that commit to creating or retaining jobs within the state. MELF may be used in conjunction with other state financing programs or with programs operated by local or regional economic development providers. In order to better serve the needs of manufacturers and others who must make substantial capital investments in order to remain competitive in the global marketplace, Act 12 of 2004 amended the MELF law, increasing the maximum loan amount and adding new eligible businesses and activities. Information technology companies, biotechnology companies are now eligible to receive MELF funding.

Marketing to Attract Tourists
The Five-Year Strategic Tourism Plan of 2010 highlighted Pennsylvania’s ability to attract a consistent flow of visitors year-round, but also recognized a need to develop assets to help increase visitor length of stays. A primary goal of the program is to promote overnight stays. Applicants should, as part of the project narrative, explain how their project will meet this goal. The program provides funding to support and develop heritage assets, enhance outdoor recreation and support the growth or development of various events. It also provides funding to support and develop heritage assets; enhance outdoor recreation and sports travel; promote educational tourism initiatives; increase domestic and international tourism and support the growth or development of various programs and events that are aligned with the State Tourism Office marketing plan.

Neighborhood Assistance Program (NAP)
The NAP was the first of its kind in the United States with goal of improving neighborhoods throughout Pennsylvania by using tax credits to create a partnership between community organizations and the business community. Through NAP, millions of dollars from the private sector have been invested in programs and projects that have positively impacted communities throughout the state. The NAP provides businesses with five options for participation:
  • NAP: The program is designed to help improve distressed neighborhoods through the creation of a partnership between a nonprofit and business/corporation, for which the business can receive tax credits for eligible contributions.
  • NAP – Partnership Program (NAP/NPP): Long-term collaborations (five years or more) of business, government and community leaders to produce a comprehensive, asset-based and relationship-driven approach to community development.
  • NAP – Enterprise Zone Program (NAP/EZP): Tax credit applicable to private companies which make qualified investments to promote community economic development in impoverished areas that have been designated as state Enterprise Zones.
  • NAP – Special Program Priorities (NAP/SPP): Under the Neighborhood Assistance Program a project must serve distressed areas or support neighborhood conservation. Projects must fall under one of the following categories: affordable housing programs, community services, crime prevention, education, job training or neighborhood assistance.
  • NAP- Charitable Food Program (NAP/CFP): The Charitable Food Program is designed to help regional food banks or emergency food providers. Funding to CFP is supplied through tax credits given to businesses making contributions to an approved provider. A tax credit of up to 55 percent can be given.
New American Development Fund
This program provides low-interest private loans to finance economic development projects within the state's federally-designated EB5 regional center that are projected to create a significant number of new, full-time, direct or indirect jobs. Funds are used to support the costs associated with new construction; the acquisition of plant, property and equipment; building rehabilitation and tenant improvements. Loan funds can also be used as working capital.

New PA Venture Capital Investment Program
This program provides loans for venture capital partnerships for investment in early-stage, job-producing Pennsylvania companies. The nature of the investment shall be equity or convertible debt. Currently investors must ensure that 50 percent of the investment is made in underserved areas of Pennsylvania, defined as outside the Philadelphia area and those populations below one million.

Next Generation Farmer Loan Program
The Next Generation Farmer Loan Program assists beginning and first-time farmers in the purchase of land, farm equipment, farm buildings and breeding livestock. The Next Generation Farmer Loan Program uses federal tax-exempt mortgage financing to reduce a farmer’s interest rate for capital purchases, such as the purchase of farmland or agricultural machinery and equipment.

Opportunity Scholarship Tax Credit Program (OSTC)
The program provides tax credits to eligible businesses contributing to an Opportunity Scholarship Organization. Business contributions are then used by Opportunity Scholarship Organizations to provide tuition assistance in the form of scholarships to eligible students residing within a low-achieving school district to attend a nonpublic school or a public school outside of their district. Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made.

Orphan or Abandoned Well Plugging Program
The Marcellus Legacy Fund allocates funds to CFA for plugging orphan or abandoned wells that have the potential to cause health, safety, or environmental concerns. Funds are used for projects which involve the cleaning out and plugging of abandoned and orphan oil and gas wells, stray gas mitigation systems and well venting projects.

Partnerships for Regional Economic Performance (PREP)
The Partnerships for Regional Economic Performance (PREP) is designed to encourage regional coordination in economic development efforts, yielding superior customer service to the business community and a comprehensive, efficient statewide economic delivery strategy. PREP will provide grants to consortia of economic development service providers that may co-locate, develop formal partnership agreements or otherwise create a coordinated and performance-based service delivery system that ensures each inquiry or lead from a business or potential entrepreneur is referred to, and acted upon expeditiously by, the appropriate service provider(s) in the region.

Pennsylvania Capital Access Program (PennCAP)
The Pennsylvania Capital Access Program (PennCAP) provides a loan guarantee to small businesses based on a portfolio concept. The Pennsylvania Economic Development Financing Authority (PEDFA) provides capital to guarantee loans made through participating lending institutions in conjunction with the program. Most companies authorized to do business in Pennsylvania will qualify for a PennCAP loan. Startup businesses may be financed through PennCAP. Consult a loan officer at a participating bank for a list of excluded activities. Loan proceeds must be used for business purposes in Pennsylvania.

Pennsylvania Economic Development Financing Authority (PEDFA) Tax Exempt and Taxable Bond Program
The program issues tax-exempt and taxable bonds, both in pooled and stand-alone transactions, to be used to finance land and building acquisition; building renovation and new construction; machinery and equipment acquisition and installation and designated infrastructure. Loans are for no less than $400,000 and no more than $10 million for manufacturers.

Pennsylvania First (PA First)
PA First is a comprehensive funding tool to facilitate increased investment and job creation within the commonwealth. This is the principal closing fund used by GAT. Funds may be used toward job training; land and building acquisition and construction; purchase and upgrade of machinery and equipment; construction and rehabilitation of infrastructure; working capital; environmental assessment and remediation.

Pennsylvania Industrial Development Authority (PIDA)
This program provides loans for industrial development projects; manufacturing, research and development; agricultural processors; firms establishing a national or regional headquarters or computer/clerical operation centers. Funds are used for land and building acquisition, building construction and renovation.

Pennsylvania Infrastructure Investment Authority (PennVEST)
The program provides low-interest loans for design, engineering and construction of publicly and privately owned drinking water distribution and treatment facilities, stormwater conveyance and wastewater treatment and collection systems. Design, engineering and construction costs associated with publicly and privately owned drinking water distribution and treatment facilities, stormwater conveyance and wastewater collection; conveyance, treatment facilities and brownfield site remediation.

Pennsylvania Infrastructure Technology Alliance (PITA)
PITA is a collaboration of the Department of Community and Economic Development (DCED), Lehigh University's Center for Advanced Technology for Large Structural Systems (ATLSS), and Carnegie Mellon University's Institute for Complex Engineered Systems to support advanced manufacturing research to improve the global competitiveness of PA companies launch new companies and retain engineering talent in PA. DCED funding supports a matching program for manufacturing research and development projects with PA university graduate students, faculty and companies. A call for proposals in specific technology areas is released to support competitive and collaborative research projects with manufacturing companies and universities.

Pennsylvania Minority Business Development Authority (PMBDA)
The Pennsylvania Minority Business Development Authority (PMBDA) Program is designed to stimulate the creation, retention and expansion of minority owned businesses and to create jobs in Pennsylvania. PMBDA provides low-interest loans to finance a portion of the costs of land, building, machinery and equipment, and working capital to minority business enterprises unable to fully finance these projects with equity, bank financing, or other private and public sources.

Pollution Prevention Assistance Program
The program encourages small businesses (100 full-time employees or less) to adopt or install pollution prevention or energy efficient equipment or processes. Funding is used for the purchase or installation of machinery, equipment or processes that are energy efficient or reduce pollution.

Powdered Metals
The Powdered Metals Program provides training programs for the existing workforce supported through Pennsylvania State University (Penn State) and the regional community education councils. The program makes use of the facilities in the schools within the North Central Pennsylvania region, such as the metalworking facility at St. Marys High School and the laboratory at the Penn State DuBois campus. The Powdered Metals grant funds are used for equipment and training related to the powdered metals industry. Funding is dependent upon budget recommendations and constraints set in the adopted annual budget for the commonwealth. The sole applicant under this program is Penn State University.

Renewable Energy Program – Geothermal & Wind
The Renewable Energy Program (REP) provides financial assistance in the forms of grant and loan funds to promote the use of alternative energy in Pennsylvania. The program is administered jointly by the Department of Community and Economic Development (DCED) and the Department of Environmental Protection (DEP) under the direction of the Commonwealth Financing Authority (CFA).

Research & Development Tax Credit
The Research and Development Tax Credit (R&D Tax Credit) program was established to assist the growth and development of technology-oriented businesses, particularly small startup technology businesses. Research & Development tax credits have been issued by the commonwealth to offset state tax liabilities for some time, and there has been a special minimum portion of R&D tax credits reserved for small businesses. However, many small businesses in the early stages of development are not yet profitable and do not have significant tax liability. In the past, these businesses have often not bothered to apply for the available R&D tax credits for which they were eligible. With the R&D Tax Credit assignment program, technology businesses can sell unused R&D tax credits on the open market to help advance and grow the business.

Second Stage Loan Program
This program offers a guarantee program for lending institutions to undertake projects for second stage manufacturers, advanced technology and life sciences businesses. Funds are used for loan guarantee primarily for working capital, but also to assist in asset financing needs.

Small Business First (SBF)
This program is designed to stimulate expansion and assist in the retention of small businesses for the purpose of creating new jobs and retaining existing jobs in Pennsylvania. Eligible enterprise types include: agricultural enterprises and producers; industrial; manufacturing, research and development; hospitality; recycling; computer-related service enterprises; construction and child day care enterprises. Funds are used for land and building, machinery and equipment and working capital costs.

State Small Business Credit Initiative (SSBCI)
The Pennsylvania Small Business Credit Initiative (SSBCI) program is designed to increase access to credit for small businesses. The commonwealth will deploy SSBCI funds through existing DCED programs to partner organizations and the Machinery and Equipment Loan Fund (MELF). Funds are used for land and building acquisition; building renovation and new construction; machinery and equipment acquisition and installation; infrastructure and working capital. Loans are made by DCED partner organizations and the MELF program, and go up to $5,000,000. Applicants include all types of businesses having 500 employees or less.

Tax Increment Financing Guarantee Program (TIF)
The Tax Increment Financing Guarantee program promotes and stimulates the general economic welfare of various regions and communities in the commonwealth and assists in the development, redevelopment and revitalization of brownfield and greenfield sites in accordance with the TIF Act. The program provides credit enhancement for TIF projects to improve market access and lower capital costs through the use of guarantees to issuers of bonds or other debt. Funds are used for infrastructure and environmental projects for industrial enterprises and retail establishments; infrastructure, environmental and building projects for manufacturers, hospitals or convention centers and utilization of abandoned or underutilized industrial, commercial, military, previously mined institutional sites or buildings or undeveloped sites planned and zoned for development in accordance with any existing comprehensive municipal plan.

Water Supply & Wastewater Infrastructure Program (PennWorks)
The Water Supply and Wastewater Infrastructure Program (PennWorks) was established by the General Assembly, subsequent to the overwhelming approval by the electorate of a referendum in May of 2004. The program provides single-year or multiyear grants to municipalities and municipal authorities, and provides loans to municipalities, municipal authorities, industrial development corporations and investor-owned water or wastewater enterprises for economic development-related projects which construct, expand or improve water and wastewater infrastructure. The PennWorks Program is administered by the Commonwealth Financing Authority (CFA).

Watershed Restoration Protection Program (WRPP)
Act 13 of 2012 established the Marcellus Legacy Fund which allocates funds to CFA for watershed restoration and protection projects. The overall goal of the WRPP is to restore and maintain stream reaches impaired by the uncontrolled discharge of nonpoint source polluted runoff and ultimately to remove these streams from DEP’s Impaired Waters list. Funds are used for projects involving watershed restoration/protection; refurbishing, restoring or creating stabilization of stream banks or channels; repairing and maintaining existing watershed protection; creating Best Management Practices (BMP) and monitoring water quality.

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.