We're sending you this special edition of "In the Loop" today in light of a major announcement made by the Department of Economic and Community Development (DECD) tied to new economic development incentives being proposed. We thought this would be of interest to you and will continue to send out special edition "In the Loop" newsletters for other major announcements throughout the year.
Governor Lamont and DECD just announced revisions to prior economic incentive packages for local businesses in Connecticut that will need to be approved by the legislature in order to be officially adopted.
The incentives focus around a handful of programs within DECD, those being the Small Business Express Program and the Manufacturing Assistance Act (MAA).
The Small Business Express Program was enacted in 2011 under Governor Dannel Malloy with the premise of provides loans and grants to Connecticut's small businesses to spur
job creation and growth. Now, Governor Lamont and DECD's Commissioner Lehman are shifting the processes of the program with the state now not acting as the direct lender, the state will be working with private lenders and banks to increase lending and provide collateralized interest in the loans.
The announcement today included revamping the program and launching Small Business Express 2.0 through a new, two-pronged model:
First, DECD will leverage the existing Capital Access for Business (CAB) loan guarantee program, similar to what is done in neighboring states such as Rhode Island and Massachusetts. In doing this, private lenders will have the ability to opt-in a small business lending program where the State of Connecticut shares a portion of the credit risk alongside the lender.
Second, DECD will work with community development financial institutions (CDFIs) to provide investment in their revolving loan fund programs to build capacity and ensure sustainable capital for higher-risk credit profiles. This is also similar to what is done in other neighboring states, such as Massachusetts and Rhode Island.
Manufacturing Assistance Act (MAA) was passed to support manufacturing projects that offer strong economic development potential by funding direct loans to growing, eligible economic-based businesses. Now DECD's proposal will refer to the Act as the "Jobs CT Program", which will be transparent and performance based where companies who create 25 or more jobs in CT can earn a benefit for creating that new employment under an "earn-as-you-grow" approach.
The program will require significantly less bonding, as well as incentivize job growth within the state's opportunity zones and the state's distressed municipalities. Employers in either of these areas are eligible to retain 50% of the withholding taxes over the same time period. According to the Governor's press release, "the salaries must be 85 percent of the median household income in the municipality where the jobs will be located and the jobs must be in the one of the following designated sectors: Aerospace/defense, Clean energy/renewables, Corporate headquarters, Distribution and logistics, Entertainment and digital media, Financial services, Information technology, Life sciences, Manufacturing and R&D facilities.
We'll continue to stay on top of these changes and developments on economic incentive legislation this year as they occur and will update you on further developments with these major policy changes.