Key Financing Programs

The Mississippi Business Finance Corporation (MBFC), an entity of the Mississippi Development Authority (MDA), administers a variety of finance programs designed to assist businesses in locating or expanding in the state. MBFC provides companies an opportunity to review all financial programs through one source.

MBFC works with other public entities and the private sector to coordinate efforts to stimulate both commercial and industrial development. The following information is provided as an overview of the finance programs available through MBFC, MDA, and local units of government. For more information regarding finance programs to assist businesses in locating or expanding in Mississippi, call 800-528-5196.

Programs available through the Mississippi Business Finance Corporation:

• Industrial Development Revenue Bond Program
• Small Enterprise Development Program
• Rural Economic Development Assistance Program

Programs available through the Mississippi Development Authority:

• Mississippi Business Investment Act Program
• Mississippi Major Economic Impact Authority
• Economic Development Highway Program
• Mississippi Access Road Program
• Energy Investment Program
• Capital Improvements Revolving Loan Program
• Community Development Block Grant Program

Programs available through local units of government:

• Local Industrial Development Revenue Bonds
• General Obligation Bonds

INDUSTRIAL DEVELOPMENT REVENUE BOND PROGRAM

The Industrial Development Revenue Bond Program reduces the interest costs of financing projects for companies through the issuance of both taxable and tax-exempt bonds. Additionally, ad valorem and sales tax exemptions are granted in conjunction with this type of public financing.

The bonds must be secured by an irrevocable, direct-pay letter of credit or other credit enhancement acceptable to MBFC.

The proceeds of a bond issue may be used for the acquisition and construction of real property, machinery and equipment, capitalized interest, reserve funds, and a limited amount of the cost if issuance in accordance with provisions of the Internal Revenue Code.

Although there is no restriction on the amount of taxable debt which may be incurred, there is a $10 million cap on tax-exempt financing. The maximum term of a bond issue will be equal to 120% of the average life of the financed assets or thirty years, whichever is less. The interest rate will be determined by the bond purchaser. The borrower will pay the costs of issuance and any other applicable fees.

SMALL ENTERPRISE DEVELOPMENT PROGRAM

The issuance of State General Obligation Bonds provides funds for manufacturing and processing companies to finance fixed assets, i.e. land, buildings, new machinery and new equipment at below market interest rates for terms of up to fifteen years.

Although a company may qualify for more than one loan under this program, the aggregate amount loaned to any company cannot exceed $2 million. Interest rates on these loans are equal to the net interest rate on the bonds issued by the State plus a servicing fee. The borrower will pay the costs of issuance and any other applicable fees.

A project must create a minimum of ten jobs, and loans cannot exceed 90% of the market value of the financed assets. Companies participation in the program will be required to obtain a bank letter of credit guaranteeing the loan.

RURAL ECONOMIC DEVELOPMENT ASSISTANCE PROGRAM

Companies financing projects through the Small Enterprise Development or Industrial Revenue Bond Programs which are administered by MBFC may be eligible to participate in the Rural Economic Development Assistance Program. The program allows eligible companies to receive credits on Mississippi corporate income taxes.

Mississippi corporate income tax credits will be granted at the end of a company’s fiscal year and will be based on the Mississippi tax liability at that time. The amount a company will be required to pay in Mississippi income tax could be reduced by an amount up to the debt service paid during the tax year.

The total amount of tax credits earned may not exceed the annual debt service on the bond issue. These credits may be used to offset up to 80% of the company’s state corporate income tax liability.

MISSISSIPPI BUSINESS INVESTMENT ACT PROGRAM

Through the issuance of State General Obligation Bonds, low-interest loans are provided to counties or incorporated cities or towns to finance improvements which complement investments by private companies.

To be eligible for financing under this program, a private company must invest at least $3.00 for every $1.00 it receives in state assistance and must create and maintain new jobs as required by state statute and MDA. The project to be financed must be necessary for the operation of the company, and it must be determined that other financing options are unavailable.

The minimum loan amount for a project is generally limited to $500,000 for a term of ten years or the estimated useful life of the project to be financed, whichever is greater. Rates of interest are set by MDA on a scale based on the number and quality of jobs created.

Loan proceeds may be used for the acquisition, expansion, or improvement of land, buildings, and infrastructure,

MISSISSIPPI MAJOR ECONOMIC IMPACT AUTHORITY

Unique in the nation, this program allows the state, through the issuance of general obligation bonds, to assist local communities in meeting the development requirements inherent in large capital projects, thereby generating an investment in the quality of life in such communities. Funds may be used to improve transportation, education, recreation and medical facilities within sixty-five miles of a project site. Certain other infrastructure needs are also eligible for financing.

Major Impact Authority projects can be new projects or expansions of existing facilities which have a minimum initial investment of $300 million by the private sector or the U. S. Government. Eligible projects include industrial or commercial projects, research and development, warehousing, distribution, transportation, processing, mining establishments, U. S. Government projects and tourism facilities.

Employers may also qualify if they have a capital investment of $150 million and create 1,000 net new jobs or if they create 1,000 net new jobs that pay 125% of the annual wage rate of the state. Ancillary developments that occur as a result of certain enterprises may also be eligible. For new projects, a fee-in-lieu of franchise tax in an amount not less than $25,000 may be negotiated. The program also authorizes the use of general obligation bonds for defraying the cost of providing for the recruitment, screening, selection, and training or retraining of employees.

ECONOMIC DEVELOPMENT HIGHWAY PROGRAM

The Economic Development Highway Program assists political subdivisions with the construction or improvement of highway projects which encourage high economic benefit projects to locate in a specific area. A high economic benefit project is any new private investment of $50 million or more by a company in land, buildings or depreciable fixed assets, or an investment of at least $20 million by a company which has statewide capital investments of at least $1 billion in the aggregate.

A private company engaged in agriculture, aquaculture, mariculture, processing, distribution, warehousing, manufacturing, research and development, or any air transportation and maintenance facility, regional shopping mall, large hotel, resort, movie industry studio or the federal government with a project meeting the high economic benefit criteria is eligible for assistance. The highway must be necessary to ensure adequate and appropriate access to the proposed project.

MISSISSIPPI ACCESS ROAD PROGRAM

Under this program, MDA and the Mississippi Department of Transportation assist local entities in the construction of links of highways or roads necessary to connect new and existing industrial sites to adequate road facilities.

ENERGY INVESTMENT PROGRAM

Through the Energy Investment Program, MDA provides financial assistance to individuals, partnerships or corporations making energy conserving capital improvements or designing and developing energy conservation processes.

This program offers low interest loans of up to $300,000, with maximum terms of seven years. Each loan may be secured by a lien on the measures installed, other business assets, and personal guarantees of the owners or officers, performance bonds or a combination of these.

CAPITAL IMPROVEMENTS REVOLVING LOAN PROGRAM

The Mississippi Capital Improvements Revolving Loan Program (CAP) is designed for making loans to counties or municipalities (Applicant) to finance capital improvements in Mississippi. Counties and municipalities are encouraged to use these loans in connection with state and federal programs. Funding for loans to applicants is derived from issuance of state bonds.

Eligible projects include:

• Construction or repair of water and sewer facilities.
• Construction or repair of drainage systems for industrial development.
• Improvements in fire protection.
• Construction of new buildings for economic development purposes.
• Renovation or repair of existing buildings for economic development purposes.
• Construction or repair of access roads for industrial development.

Loan terms:
The cumulative maximum loan amount for any eligible local unit of government during a calendar year is $500,000. The term of any loan shall not exceed 20 years. The loan amount will be limited by the applicant’s ability to repay the loan within acceptable terms. The rate of interest on loans which qualify for tax exempt status shall be at 3 percent per annum, calculated according to the actuarial method at the time of loan approval. Taxable CAP loans shall be at the true interest cost on the most recent issue of 20 year state general obligation bonds occurring prior to the date such loan is made.

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM

The State Community Development Block Grant (CDBG) Program was established to aid in the development of viable communities which provide a suitable living environment, decent housing, and economic opportunities for their residents.

The CDBG Program makes grants available to incorporated municipalities and county governments that show a genuine need for specific projects and can meet the program’s state and federal eligibility requirements. Benefit to low-and moderate-income persons is the basic thrust of funding. All Mississippi cities and counties are eligible for CDBG funding, except for the entitlement cities of Jackson, Biloxi, Gulfport, Hattiesburg, Moss Point and Pascagoula.

Communities may apply for CDBG funding through the category of Economic Development. The primary criteria for economic development funding is to provide jobs for persons of low/moderate income. The Economic Development category accepts applications for communities in two subcategories:

Economic Development Public Improvements funds such activities as the provision of water, sewer, and access roads within a community.

The Economic Development Loan Program makes it possible for for-profit businesses to promote economic development by creating or retaining jobs primarily for low-and moderate-income families.

LOCAL INDUSTRIAL DEVELOPMET REVENUE BONDS

Local political entities in Mississippi, including counties, supervisors’ districts, incorporated cities and towns, have the authority to issue tax-exempt and taxable industrial development revenue bonds to finance new or expanding industrial enterprises. There is no election approval required unless 20% or more of the entity’s electors object to the bond issuance in writing. Ownership of a bond-financed facility is retained by the issuing political entity, which leases it to a company for rental sufficient to pay the annual principal and interest on bonds.

Industrial development revenue bonds can finance up to 100% of total project costs, including land, buildings, fixtures, new equipment, new machinery and professional fees.

Facilities financed by such bonds are allowed up to a ten-year property tax exemption, in addition to being exempt from most sales and use taxes on project related purchases during construction.

GENERAL OBLIGATION BONDS

Local political entities have the authority to issue general obligation bonds for the purpose of acquiring sites and constructing facilities for lease to new or expanding industries with rentals sufficient to amortize the debt service on the bonds.

General obligation bonds carry the full faith and credit of the issuing political entity. As title to the property remains with the political entity issuing the bonds, not taxes, except school taxes, are assessed on the improvements made with the proceeds of such bonds. An agreement is negotiated between the industry and political entity covering the details of the issuance of the bonds and the lease.

For more information regarding finance programs to assist businesses in locating or expanding in Mississippi, call 800-528-5196.