What to Know About Grants and Tax Reform
Illinois saw three interest rate hikes this year and the United States saw the largest tax reform in more than 30 years. It’s important to stay on top of trends and understand your options for financing. Hear from three experts who cover a variety of ways to stay smart with your dollars.
Options for Non-Traditional Financing Programs
with Ken Holub, Senior Vice President, MB Financial Bank
Ken specializes in the financing and cash management needs of manufacturers, service companies, distributors, municipalities and not-for-profits in Chicagoland. Below are four popular financing program options.
Industrial Revenue Bonds (IRB) are loans for private manufacturing companies where the interest is exempt from federal income taxation and sometimes exempt from state income taxation. To qualify, the dollars must be used for developing a new facility, purchasing new manufacturing equipment or acquiring an existing company or facility.
SBA 504 is a loan provided by the US Small Business Administration. Qualifications include for-profits with less than $15 million in net worth and less than $5 million in after-tax profits annually. The development project funded by the loan must promote economic development. Only a 10% down payment is required.
New Markets Tax Credits (NMTC) are meant to stimulate investments into projects in underserved markets. This federal income tax credit applies within an eligible census tract where the investment promotes economic activity, increases job growth or some other qualified service.
DCEO Advantage Illinois Participation Loan Program helps small businesses receive medium to long-term financing through term loans. This program can be used for renovation/construction, business procurement, start-up costs and more. Qualified businesses have less than 750 employees.
The bank will play a key part in educating and consulting you on these options.
What to Know About Tax Reform
with Karen Snodgrass, CPA, Principal at Cray, Kaiser Ltd.
Karen oversees the tax division at Cray Kaiser and specializes in closely held and/or family businesses. The Tax Cuts and Jobs Act signed into law on December 22nd, 2017. These are in effect for 2018. What can we expect?
Corporate tax rate reduction takes effect for tax years after December 31st, 2017. C Corporations drop to pay a flat 21% tax. In the state of Illinois, S Corporations pay 1.5% and C Corporations pay 9.5%. Most businesses will be better of maintaining an existing S election.
Section 199A applies to pass-through entities and is generally a 20% deduction. Limitations to this include income thresholds and specialized services. Specialized services will see less of a tax benefit, so it is critical to understand what it means:
“Any trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees.”
This excludes architects, engineers, insurance, leasing, financing, hotels and restaurants.
Ultimately most taxpayers will see a federal tax benefit. Get in touch with your tax advisor to discuss these changes and to review your corporate structure.
Grants in the State of Illinois
with Mary Rose Hennessy, President, Illinois BIS
Illinois BIS has one mission: help companies in the state of Illinois thrive. Through their custom consulting projects and training programs, they’ve helped more than 3,800 companies in Illinois over the last 33 years. In addition to training, they help educate companies on grant funding and helps facilitate the process for obtaining grants that the state offers. Below are a few examples of grants your organization could earn.
WIOA Incumbent Worker County Grants are your best option if you are interested in employee training. There is a 50/50 match for the wages you pay your employees. These reimbursement grants are available in Cook, DuPage, Will, Kane and Lake counties.
WIOA Statewide Activities Illinois Talent Pipeline grants are done through Illinois BIS and are applicable to projects that support talent strategies or layoff aversion. This grant will pay for 40% of the cost to perform the trainings and purchase necessary materials. Quarterly reporting is required.
Trade Adjustment Assistance for Firms (TAAF) is a federal program providing financial assistance to companies with international import competition. It covers 50% of costs for projects built to enhance the manufacturer’s competitive position.
Employee Training Investment Program (ETIP) is a grant available through the Illinois Manufacturers’ Association for training and improving the full-time Illinois based workforce in your organization. It covers up to 50% of approved expenses which include internal trainer costs and external vendor or tuition expenses.
Other Grant Resources
Illinois Worknet: www.illinoisworknet.com
Illinois Catalog of State Financial Assistance: https://www.illinois.gov/sites/GATA/Grants/SitePages/CSFA.aspx
No matter what funding options you choose to explore, the best first step is to research and get involved early. It is worth the time and investment to see where your business qualifies. There are free dollars out there, so go out and get them.
This post is a recap of the Grants & Funding program on February 8, 2018 with Ken Holub of MB Financial, Karen Snodgrass of Cray Kaiser Ltd., and Mary Rose Hennessy of Illinois BIS.