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Community Economic Betterment Account and Economic Development Set-Aside
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Community Economic Betterment Account and Economic Development Set-Aside
Promoting Business Growth through Innovative and Flexible Investment Programs
The State of Iowa offers a broad business financing assistance system. Within this system is the Iowa Department of Economic Development (IDED), a major investment assistance agency that offers the investment tools known as the Community Economic Betterment Account (CEBA) and the Economic Development Set-Aside (EDSA).
● CEBA (Community Economic Betterment Account)
● EDSA (Economic Development Set-Aside)
These programs provide financial assistance to the production, software development, insurance, financial and numerous other industries.
These two programs were established more than ten years ago. They provide financial assistance to companies that generate new employment opportunities, retain existing jobs and make new investments in the State of Iowa. Part of the amount of funding is based on the number of jobs generated and retained by the corporate applicant.
The funds provided by these programs may be used for a wide range of business development purposes, including:
● Building construction or reconstruction
● Purchasing of equipment
● Acquisition of land or buildings
● Site development – clearance, demolition, building removal
● Operating and maintenance expenses
● Working capital
The money provided by CEBA and EDSA is not an independent offering; rather, they are used to leverage bank loans and investment, and other financial assistance.
The CEBA program also includes a “Venture Project” component that offers assistance for the development of business, particularly with regard to early-stage and start-up businesses. Financial assistance is provided as a means of aiding new businesses in achieving stability. This new business promotion component allows for longer-term job creation and investment performance periods than otherwise offered through CEBA.
There is another assistance program, known as Public Facilities Set-Aside (PFSA), which provides financial assistance for city and county public infrastructure improvements that make it possible for businesses to create new job opportunities. It assists projects that will help the launching of new businesses and the expansion of existing businesses, as well as acting as an incentive to attract out-of-state businesses to the State of Iowa.
Benefits from Participating in CEBA and EDSA
The amount of funding available for each individual project differs depending on which program you look to for assistance. In the case of CEBA, the maximum amount of assistance available is $1 million. As an alternative, nontraditional, 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. For the promotion of new businesses, CEBA offers tax-free investment assistance of up to $100,000. The maximum amount of assistance available through EDSA is $500,000.
The chart below compares funds available from each program.
CEBA CEBA Venture Project EDSA
Maximum Assistance Available $1,000,000 $100,000 $500,000
Business Operation Period 3 years Less than 5 years 2 years
Assistance for New Employment Opportunities or Existing Businesses 90% of the regional/county standard wage 80% of the regional/county standard wage 75% of the county standard wage
Eligibility Requirements for Assistance
The proposed or existing operation must be located within the State of Iowa
The business must create or retain jobs that meet CEBA/EDSA county or regional wage standards
The business must make a capital investment related to the proposed project
The business must demonstrate a need for the requested funds
The project must not proceed prior to the funding decision
Projects are also Evaluated According to the Following Criteria
The quality of the created/retained jobs (i.e., employee wages and benefit packages)
The significant, positive impact the project makes on the community and the net economic gain to the state
For CEBA participation, the amount of community support to be contributed to the project
The impact of the proposed project on in-state competitors
Procedures for Applying for CEBA or EDSA Assistance
Iowa allows 50% deductibility of federal taxes from Iowa corporate income tax.
In the case of CEBA applications, the application forms are prepared by the city, county or a community college acting as the agent, and filed to IDED. With EDSA applications, the application forms are prepared by the city or county acting as the agent, and filed to IDED.
Completed application forms submitted to CEBA will once again be reviewed by the program manager, presented at a meeting of IDED’s board of directors and a final determination made. With EDSA applications, there will also be a review by the program manager. The application will be presented to the Bureau Chief who will make a final determination.
Once approval has been granted, the city or county government, IDED and the corporation will review the conditions in the letter of agreement and sign it.