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Wisconsin, Nebraska and Illinois among states with new initiatives to help small business

by Laura Tomaka ~ January 2012 ~ Stateline Midwest »
More than half of the nation’s private sector jobs come from small businesses — firms with fewer than 500 workers.
Therefore, it’s no surprise that as states strategize to jump-start their economies, small-business growth has been the focus of much attention and new legislation. In the Midwest, the result has been new tax incentives and grant programs; states, too, are tapping federal funds aimed at supporting small-business development.
Late in 2011, Wisconsin lawmakers considered a number of jobs-related bills during a special session dubbed by legislative leaders as “Back to Work Wisconsin.”
Fourteen business-related bills were approved, including a measure (SS SB 2) that modifies the state’s Small Business Loan program in order to increase the number of businesses eligible for funding. The new law removes the requirement that a small-business owner be actively engaged in the business and expands eligibility to include businesses with 250 or fewer employees (the previous limit was 50). It also increases the maximum loan guaranteed to 80 percent of the principal or $750,000, whichever is less (the previous cap was $200,000).
New laws and programs for small businesses also took effect in Nebraska and Illinois in 2011.
Nebraska has established a new angel tax credit (LB 389) that will provide a credit of up to $3 million for investments in small businesses primarily engaged in the high-tech economic sector.
Individuals investing at least $25,000 and funds investing at least $50,000 will qualify for a tax credit of 35 percent of the investment. Businesses in areas designated as “distressed” qualify for an additional 5 percent credit.
Nebraska lawmakers also passed the Business Innovation Act (LB 387), which will provide $7 million in grants annually to small businesses. The funds can be used to assist microenterprises, for companies receiving Small Business Innovation Research grants, and for funding prototype development and commercialization activities. Forty percent of the funds will be dedicated to distressed areas of the state: counties with a population of less than 100,000 that have high unemployment, low per capita income or significant population loss.
In October, Illinois Gov. Pat Quinn announced plans to offer new funding assistance for the state’s entrepreneurs and small businesses. Under the Advantage Illinois initiative, the state will use $78 million in federal funds to encourage private lending to small- and medium-sized businesses.
Advantage Illinois includes a capital access program, a participation loan program, a cash collateral support program and a venture fund program. The state is enrolling lending institutions that will provide financing to businesses under the first three programs. The venture fund program is designed to improve capital investment in young, innovative companies in the state.
For every $1 of federal funding, the initiative is expected to generate at least $10 in new private lending, resulting in approximately $800 million in private sector investments and loans over the next few years.

 

Article written by Laura Tomaka, CSG Midwest staff liaison to the Midwestern Legislative Conference Economic Development Committee. The committee’s co-chairs are Rep. Ted Celeste of Ohio and Sen. Mike Vehle of South Dakota.