Financing
NEW! Recovery Zone Facility Bonds (RZFB) Offered in Washington County, MD
Maryland Economic Development Assistance Authority and Fund (MEDAAF)
There are five financing capabilities offered through the Maryland Economic
Development Assistance Authority and Fund (MEDAAF), with assistance being
provided to the business community and political jurisdictions. To
qualify for assistance from MEDAAF, applicants are restricted to businesses
located within a priority funding area and an eligible industry sector.
With a few exceptions, assistance cannot exceed 70 percent of the total
project costs.
The specific capabilities are:
- Significant Strategic Economic Development Opportunities: A project that
provides eligible industries with a significant economic development opportunity
on a statewide or regional level.
- Assistance is provided to a business in the form of a loan.
- Maximum assistance cannot exceed the lesser of $10 million or 20 percent
of the current fund balance.
- Local Economic Development Opportunity: A business
that provides a valuable economic development opportunity to the jurisdiction
in which the business is located and is a priority for the governing body
of that jurisdiction.
- The local jurisdiction must sponsor the business and must participate in
the form of a guarantee, a direct loan, or a grant in an amount equal to
at least 10 percent of the State's financial assistance.
- Loans may be up to $5 million, while conditional loans and grants may be
up to $2 million.
- Direct Assistance to Local Jurisdictions or MEDCO: DBED
may provide financial assistance to a local jurisdiction for local economic
development needs.
- The total amount of assistance cannot exceed $3 million unless the
jurisdiction is a "qualified distressed county."
- 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 plan.
- Regional or Local Revolving Loan Fund: Grants to local jurisdictions to help capitalize local revolving loan funds.
- Eligible applicants include a county or regional economic development agency,
whether public or private. A jurisdiction may transfer all or a portion of
its allocation to a regional revolving loan fund.
- Each jurisdiction may receive a grant of $250,000 annually.
- To qualify for a grant, the local government must provide a matching grant
of funds to the local revolving loan fund.
- Special Purposes Loan: This loan
targets specific funding initiatives that are deemed critical to the state's
economic health and development.
- The specific program determines the level and type of financial assistance
provided.
- The special purpose initiatives required by the legislature include
the Brownfield Revitalization Incentive, Seafood and Aquaculture, Animal
Waste, Arts & Entertainment,
and Child Care Center programs.
- Economic Development Opportunities Fund
(Sunny Day Fund): This fund promotes 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 in Priority Funding Areas.
- Applicants must possess a strong balance sheet and be credit worthy. Projects
must be consistent with the State's strategic economic development
plan.
- Substantial employment, particularly in areas of high unemployment, must
be created by the project.
- Participants must provide a minimum capital investment of at least five times
the amount of the Sunny Day assistance.
Maryland Industrial Development Financing Authority (MIDFA)
MIDFA, which is administered by DBED, encourages private sector financing
in economic development projects located in Priority Funding Areas. MIDFA
facilitates capital access by issuing private activity revenue bonds and
can provide credit insurance in the form of a deficiency guaranty to reduce
lender’s risk. While the transaction size is generally not limited,
the credit enhancement is subject to the applicable program limits.
Industrial Revenue Bonds
- Taxable Bond: Provides access to long-term
capital markets for primarily fixed asset financing.
- Tax-Exempt Bond: Provides access to long-term capital markets for fixed
asset financing at tax-exempt rates. Eligibility is limited by Federal
tax law to 501(c)(3) non-profit organizations, manufacturing facilities
and certain solid waste projects. Additional limitations apply
to the specific transaction type.
Credit Insurance
- Conventional Program: Insures up to 80 percent, not to exceed $2.5
million of a transaction made by a financial institution. Export
transactions may be insured up to 90 percent.
- Bond Program: Insures bonds up to 100 percent, not to exceed $7.5 million
of taxable or tax-exempt bonds.
- Linked Deposits: In certain rural areas with qualifying high unemployment,
MIDFA can provide a certificate of deposit to the lender as a funding
source and pricing incentive to provide below market rate loans to an
eligible small business. The certificate of deposit is not a guaranty
or collateral to the loan.
Tri-County Council Revolving Loan Fund
This organization provides loans to new and expanding small to mid-sized
businesses. The funds are to be used as gap financing, not to exceed 25%
maximum of fixed asset costs or 50% maximum of working capital ($10,000
to 250,000). Maintenance and expansion of job opportunities is a program
goal.
Hagerstown Revolving Loan Fund (HRLF)
Loans are available for
existing or new businesses which will create or retain jobs or improve the
economic condition and tax base within the City. Eligible costs include building
acquisition, building rehabilitation, machinery and equipment, new construction,
professional fees, working capital, and refinance existing debt in special
circumstances. HRLF funds are intended to be used as gap financing following
efforts to secure conventional financing. Limitations are $30,000 maximum
for working capital or professional fee loan and $100,000 maximum for securable
assets.
Hagerstown Commercial Rehabilitation Loans
Hagerstown Department of Community Development (CDBG) loans are available
to bring a building, or commercial portion of a building, up to code. Eligible
projects provide a public benefit, such as enhancements for low-to-moderate
income and handicapped persons or blight eradication in locally designated
areas.
Small Business Administration 504 Program
Provides expansion loans to for-profit small businesses. Funds are intended
to be used for acquisition of land, building, machinery and equipment,
construction and renovation which results in the creation of new jobs.
Funding provides up to 40% of eligible project costs, with a maximum of
$1,500,000. Long-term, below market rate loans are available. There are
three criteria for eligibility:
- The company’s average net income cannot
surpass $2.5 million.
- The anticipated project size must be greater than the personal, non-retirement,
unencumbered liquid assets of the guarantors/principals.
- Net worth of the operating companies must be $7.5 million or less.
Maryland Neighborhood BusinessWorks
Maryland Department of Housing and Community Development — Division
of Neighborhood Revitalization — The Neighborhood BusinessWorks loan
program provides gap financing, i.e. subordinate financing, to new or expanding
small businesses and nonprofit organizations in locally designated neighborhood
revitalization areas. Financing generally ranges from $25,000 to $500,000.
Each project is reviewed for financial need, which may be up to 50 percent
of total project costs. Refinancing is not considered part of the project
cost.
