There are many reasons why the Ocean State is a great place to operate a manufacturing business. While it’s a commonly known fact that Rhode Island was the birthplace of the American Industrial Revolution, it may be less widely understood that when it comes to benefits and advantages for the manufacturing industry, Rhode Island’s got its bases covered. Consider these 1999 business success stories acheived in part with the assistance of the Rhode Island Economic Development Corporation (RIEDC) Financial Services department:
DICA Technologies, Inc., a Portsmouth firm specializing in the manufacture of software security devices, announced plans to expand its workforce and improve its product development and marketing activities. “This loan will help us expand our resources in the United States and present a unified message to our customers around the world,” said DICA Technologies, Inc. President Frank Piepiorra. “We’re well on our way to achieving our expansion both locally and worldwide.”
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Likewise, AKL Flexo Tech-USA, a manufacturer of state-of-the-art printing sleeves for the printing industy was able to purchase a 26,000-square-foot building at the Highland Corporate Park, Cumberland with RIEDC assistance. “Because of the state’s support, AKL was able to structure a financing package that will result in $5.5 million of new investment and 50 new jobs in Rhode Island,” said Akl Flexo Tech-USA Cheief Executive Officer Thomas Frater.
Take a look at some of the programs, services and benefits which are available to local companies seeking financial assistance and opportunities for success:
The Small Business Loan Fund Corporation (SBLFC): Provides financing to businesses unable to obtain financing through conventional resources. The Corporation also provides gap financing to Rhode Island business. In 1999, the SBLFC experienced a reduction in the number of non-performing loans last year and its most productive year to date.
RIEDC/Rhode Island Industrial Facilities Corporation (RIIFC): The corporations are empowered to issue Industrial Revenue Bonds for the financing of qualified commercial and industrial projects. Bond proceeds may be used for the acquisition of fixed assets only, such as land, buildings, machinery and equipment. Bonds offer a competitive interest rate which is market driven, a sales tax exemption on all purchases included in the project which are subject to Rhode Island sales tax, longer term than conventional lenders, and potentially up to one hundred percent financing (Under Rhode Island law, manufacturing equipment is automatically exempt from sales and use tax.). The project and the credit of the user provide the security for the bonds which may be issued on the userís financial strength when the user is appropriately rated. Bonds may also be issued with an enhancement letter of credit from a financial institution. Bonds issued by either the RIEDC or RIIFC are automatically exempt from Rhode Island state income tax.
Tax-Exempt “Small Issue Bonds:” The Internal Revenue Code governs the tax status of all IRB’s issued in the United States. Under the small-issue bond provisions of the Omnibus Budget Reconciliation Act of 1993, interest on certain bonds with face amounts of up to $10 million is excluded from income if at least 95 percent of the bond proceeds is used to finance manufacturing facilities or machinery and equipment. Therefore, IRB’s issued by RIEDC or RIIFC may be exempt from both federal and state income tax.
The Rhode Island Industrial-Recreational Building Authority (RIIRBA): The Authority may insure Industrial Revenue Bonds issued by either RIEDC or RIIFC and mortgages issued by conventional lenders secured by manufacturing, processing, office, wholesale, retail and tourist-travel related facilities and machinery and equipment associated with these types of entities. The RIIRBA is authorized to insure up to $5,000,000 for any one project. It does so by pledging its assets to the credit provider, thereby “enhancing” the underlying credit. The RIIRBA will insure the bonds or the mortgage once the project is completed. The applicant must provide its own interim financing. At the completion of the project, the Authority will guarantee the permanent mortgage or bonds.
Urban Enterprise Equity Fund (UEEF): Provides capital to businesses located in the state’s eleven Enterprise Zones, as well as to businesses in an urban community. The program is designed to leverage the equity provided by the fund with additional funding through conventional lending sources and the SBA 7A program.
To learn more about these programs and other assistance options offered through the RIEDC, call the Corporation at (401) 222-2601. The RIEDC is the State’s economic development organization charged with the oversight of a Business Services Department, the Rhode Island Tourism Division, the Quonset Davisville Port & Commerce Park, the Rhode Island Film & Television Office and the Rhode Island Sports Council.
