Financial Assistance Programs

Iowa offers an array of financial assistance programs to aid businesses with their expansions. Listed below are the more frequently used programs, however the list is not exhaustive. Persons interested in Iowa's financial assistance programs should contact the IADG office to discuss the most appropriate program for the needs of your project.

Programs offered through the Iowa Department of Economic Development:
(posted with permission by the Iowa Department of Economic Development)

1. Community Economic Betterment Account (CEBA)
2. Economic Development Set-Aside (EDSA)
3. Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP)
4. Enterprise Zones
5. High Quality Jobs Creation Program (HQJCP)
6. Tax Increment Financing (TIF)
7. 0% Rural Economic Development Loan
8. Revolving Loan Funds
9. IDED Project Review Form
10. Wage Thresholds Map

Community Economic Betterment Account (CEBA)

The CEBA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans.

The CEBA program also contains a "Venture Project" component specifically designed for early-stage and start-up businesses. Financial assistance is provided in forms conducive to the company's stage of maturity. The "Venture Project" component allows for longer-term job creation and investment performance periods than otherwise offered through CEBA.

The CEBA program can provide assistance up to $1 million. As an alternative, non-traditional, short-term float loans or interim loans greater than $1 million may be available. The funding level for start-up companies varies depending upon employee wage rates. Assistance through CEBA's "Venture Project" component is provided as an "equity-like" investment, with a maximum award of $100,000.

Economic Development Set-Aside (EDSA)

The EDSA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans.

The EDSA program assistance is targeted toward business projects located in communities of under 50,000 population. At least 51 percent of the created/retained employment opportunities must be made available to individuals presently earning wages defined as low-and-moderate income. The EDSA program can provide assistance up to $1 million.

Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP)

The Value-Added Agricultural Products and Processes Financial Assistance Program seeks to increase the innovative utilization of Iowa's agricultural commodities. It accomplishes this by investing in the development of new agri-products and new processing technologies.

VAAPFAP may assist projects in these primary categories:

1. Innovative Agricultural Products and Processes – provides financial assistance for projects that use Iowa agricultural commodities to produce higher-value products that are not commonly produced in Iowa.
2. Renewable Fuels and Co-Products – provides financial assistance for development of renewable fuel production facilities such as biodiesel or ethanol facilities that yield co-products used for livestock feed.
3. Agricultural Biotechnology Industry, Biomass and Alternative Energy – provides financial assistance to agricultural businesses that utilize scientifically enhanced plants or animals that can be raised by producers. Assistance is also available for agricultural biomass businesses that utilize commodity crops, agricultural by-products, or animal feedstock in the production of chemicals, protein products, or other similar products. Businesses involved in the production of alternate energy which could include ethanol, biodiesel, biomass, hydrogen, or the production of wind energy can also benefit from this program.
4. Organic Processing and Emerging Markets – provides assistance to businesses that add value through further processing of organic products and through emerging markets.
5. Project Creation Assistance – available for projects that may be ineligible under the regular program because of their “precommercial” status.

Program Eligibility Requirements:

• The proposed project must be located in Iowa.
• The business must have a business plan demonstrating a viable market, and managerial and technical experience.
• The business should also have completed a feasibility study documenting the viability of the proposed start-up business.
• Must meet required wage thresholds

Projects are also evaluated according to the following criteria:

• The degree to which the facility will increase the utilization of agricultural commodities produced in the state.
• New and innovative
• Feasibility
• The proportion of private funds to be contributed to the project.
• The level of need of the region where the existing facility is, or the proposed facility is to be located.
• The degree to which the facility produces a co-product that is marketed in the same locality as the facility.

Any single project may apply for up to $525,000 in assistance. Financial assistance is provided in the form of loans and forgivable loans. Generally, assistance of $20,000 or more is usually awarded as a combination of loans and forgivable loans, with the forgivable portion decreasing as the award size increases.

Enterprise Zones

Business locating or expanding in an Enterprise Zone may receive the following tax benefits:

• A local property tax exemption of up to 100% of the value added to the property to a period not to exceed 10 years.
• Additional funding for training new employees. If applicable, these funds would be in addition to those authorized under the Iowa New Jobs Training Program.
• A refund of state sales, service, or use taxes paid to contractors or subcontractors during construction.
• For warehouse or distribution center projects, a refund of sales and use taxes paid on racks, shelving, and conveyor equipment.
• An investment tax credit of up to a maximum of 10% of the qualifying investment, amortized over 5 years. This tax credit is earned when the corresponding asset is placed in service and can be carried forward for up to seven additional years or until depleted, whichever occurs first.
• The State's refundable research activities credit may be doubled while the business is participating in the program for up to a maximum of 10 years.

To receive these benefits, businesses must:

• The business must make a minimum qualifying investment of $500,000 over a three year period. Qualifying investment includes the cost of land, buildings, improvements to buildings, manufacturing machinery and equipment, and/or computer hardware.
• The business must create at least 10 full-time, project-related jobs over a three year period and maintain them for an additional 10 years.
• The business must provide all full-time employees with a standard medical and dental insurance plan of which the business pays 80% of the premiums for employee-only coverage or provide a monetarily-equivalent benefit package.
• The business must pay new employees an average starting wage which is equal to or greater than 90% of the average county or regional wage, whichever is lower. (Check with IDED for the community's current wage requirement.)
• The business can not be a retail establishment or a business whose entrance is limited by coverage charge or membership
• The business can not close or relocate its operation in one area of the state and relocate substantially the same operation in the Enterprise Zone.
• The local Enterprise Zone Commission and IDED must approve the business' application for Enterprise Zone program incentives prior to project initiation.

Download a map of eligible enterprise zone counties and communities.

High Quality Jobs Creation Program (HQJCP)

The High Quality Job Creation Program provides qualifying businesses tax credits to off-set the cost incurred to locate, expand or modernize an Iowa facility. To qualify for this very flexible assistance package that includes tax credits, exemptions and/ or refunds, a business must be a non-retail or non-service business and meet at least four of the eligibility requirements.

Qualifying businesses participating in HQJCP receive substantial benefits, including:

Actual award amounts will be based on the business's level of need; the quality of the jobs; the percentage of created jobs defined as high-quality; and the economic impact of the project. Once at least four of those criterions are met, the following tax incentives may be available:

• A local property tax exemption of up to 100% of the value added to the property to a period not to exceed 20 years.
• A refund of state sales, service, or use taxes paid to contractors or subcontractors during construction.
• For warehouse or distribution center projects, a refund of sales and use taxes paid on racks, shelving, and conveyor equipment.
• An investment tax credit equal to a percentage of the qualifying investment, amortized over 5 years. This tax credit is earned when the corresponding asset is placed in service and can be carried forward for up to seven additional years or until depleted, whichever occurs first.
• The State's refundable research activities credit may be doubled while the business is participating in the program.

A business must meet at least four of the following requirements:

• Offer a pension or profit sharing plan for all employees.
• Produce value-added goods or be in one of 11 targeted industries.
• Provide medical and dental insurance and pay 80% of the premiums.
• Offer child care services.
• Invest at least 1% of pretax profits in research and development.
• Invest at least 1% of pretax profits in worker training.
• Have active productivity and worker safety improvement program(s).
• Purchase and occupy a vacant building which is at least 20,000 square feet.
• Must meet wage thresholds requirements.

Download a Schedule of the Maximum Tax Incentive Award Available to a Business Based on Qualifying Jobs, Wages, & Investment.

Iowa Department of Economic Development (IDED)

Businesses interested in any of these programs should consult the Iowa Department of Economic Development along with relevant local organizations to determine eligibility.

To start the IDED application process, businesses must complete the Project Review Form. Download the form here.

Please note, in order to receive benefits, the business' application for benefits must receive final approval from the Iowa Department of Economic Development Board before project initiation.

Wage Thresholds

Effective July 1, 2005, wage thresholds for applicants applying for financial assistance from IDED's business financial assistance programs will be revised based upon the re-establishment of the "Grow Iowa Values Fund".

Quarterly Wage Calculation

Average wages will be calculated on a quarterly basis, rather than annually, using wage data submitted by Iowa Workforce Development during the most recent four quarters of available data. Calculating wages on a quarterly basis will enable IDED to utilize the most recent data available.

Wage thresholds will be divided into the following categories:

130% of average county wage

• CEBA requests of more than $500,000
• Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP)
• High Quality Job Creation Program (HQJC)

160% of average county wage

• High Quality Job Creation Program (HQJC)

The value of certain employee benefits may be included for purposes of calculating the starting wage for jobs pledged with Grow Iowa Values Fund dollars and the High Quality Job Creation Program (HQJC). These benefits include: medical and dental insurance plans, pension and profit sharing plans, child care services, life insurance coverage, vision insurance plans, and disability coverage.

90% of average county or regional wage, whichever is lower

• Enterprise Zone Program

100% of average county or regional wage, whichever is lower

• Economic Development Set-Aside Program (EDSA)

Download the 2009 (2nd quarter) Wage Thresholds (MS Excel: 59K). These rates cover the period from
April 1, 2009, thru June 30, 2009.

Tax Increment Financing (TIF)

City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation caused by the construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. Tax Increment Financing may be used to offset the cost of public improvements and utilities that will serve the new private development, to finance direct grants or loans to a company, or to provide the local match for federal or state economic development assistance programs.

Unique financial assistance programs may apply to your business expansion.

0% Rural Economic Development Loan

The Rural Economic Development Loan Program was specifically designed to assist job creation projects in rural areas. Rural Electric Cooperatives can apply to this unique USDA program that allows for up to $740,000 in 0% interest financing to assist with your business expansion.

Contact IADG for program and collateral requirements, qualifications and further details.

Revolving Loan Funds

IADG members operate 31 individual revolving loan funds across Iowa providing over $25 million in alternative financing. These flexible financing tools offer low cost financing to assist with your expansion project. Contact IADG for funds availability, application and collateral requirements, and further details.

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