Delaware Incentives and Workforce Development Guide

For a list of Delaware economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

FINANCING & GRANTS

Brownfield Assistance Program: Encourages redevelopment of environmentally distressed sites within Delaware by helping reduce capital expenditures. The Program is funded through the Delaware Strategic Fund and offers up to $1 million annually in matching funds to assist with investigation and remediation of brownfield sites. To be eligible, the owner, prospective owner or developer must obtain a Brownfield Certification through DNREC that recognizes the site as a Brownfield. After obtaining the certification, the owner, prospective owner or developer can send an application for evaluation and processing. Eligibility for brownfield assistance is based on the project’s potential to serve a public purpose by maintaining or expanding employment in the State, by maintaining, expanding or diversifying business and industry in the State, and/or by maintaining or increasing the tax base in the State.

Delaware Capital Access Program (DCAP): This private-public match program gives banks a flexible, transparent tool to expand small business lending. By using a small amount of public resources to generate a large amount of private bank financing, the program provides more Delaware businesses access to bank financing. The DCAP is based on a risk pooling concept. When a lending institution makes a loan under the program, the bank/borrower contribute a premium payment to a loan reserve fund. This is a private transaction to be negotiated between the lending institution and the borrower. The Delaware Economic Development Office (DEDO) then matches the premium payment. DEDO’s matching premium can range from 2.5 to 6.0 times the lender/borrower contribution. The pool of reserves builds as additional loans are enrolled in the program. The lender can withdraw from the reserve in the event of an enrolled loan defaulting. Even after a loan’s maturity, the reserves remain available to the lender for additional loan claims.

Delaware Rural Irrigation Program (DRIP) Revolving Loan Fund: This revolving no-interest loan fund is available to qualified Delaware farmers to add new irrigation systems, including center pivot, linear move, towable systems, span angle systems, corner arm systems, single-phase systems or wells and filters associated with drip irrigation systems. The goal is to significantly increase the amount of irrigated cropland in the state. The program works with private lending institutions to provide borrowers with no-cost capital equal to the normal and customary equity requirements of a private loan. DRIP is administered through the Delaware Department of Agriculture and the DEDO. The loan fund would finance up to 25% of the total project cost, not to exceed $25,000, at zero interest for a term of no longer than seven years with repayment of principal beginning in year three of the loan. A bank or other lending institution must loan the remaining balance of the project. Eligibility requirements include:

  • Farmers must be actively engaged for at least two years in the growing and harvesting of cash crops such as corn, soybeans, fruits and vegetables in Delaware.
  • Farmers must own or lease the land to be irrigated.
  • The existing non-irrigated land must be located in the State of Delaware to grow crops.
  • Funds may be used to drill new well(s), to acquire power units, and to fabricate and install new irrigation systems.
  • All work must be performed by experienced and qualified contractors licensed by and located in the State of Delaware.
  • Project financing is limited to one project per individual farm annually.

Delaware Strategic Fund (DSF): Businesses that demonstrate potential to create employment opportunities in Delaware are eligible to apply for the DSF, the state’s primary funding source to provide low-interest loans and grants to businesses for job creation, relocation, expansion and brownfield redevelopment. Financial assistance may be provided in the form of low-interest loans, grants or other creative financial instruments.

Delaware Technical Innovation Program (DTIP): The Delaware Strategic Fund also supports business research through funding transition grants that will bring innovative new products, jobs and revenue to Delaware. Companies involved in small business innovation—including research-and-development firms looking for the next scientific and technological breakthroughs—can apply for Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) grants as a pathway to receiving DTIP grants. These grants help promote the entrepreneurial spirit in Delaware. To find more details, see the Delaware Technical Innovation Program official legislation.

State Small Business Credit Initiative (SSBCI): Small businesses in Delaware with fewer than 750 employees are eligible to apply for the SSBCI . This loan participation program is designed to enhance access to capital and lower interest rates. Loan proceeds can be used for any business expense—including payroll, inventory, machinery and equipment—and to supplement general working capital needs. The Delaware Economic Development Office (DEDO) is authorized to fund up to 20% of this type of a loan, not to exceed $5 million. The maximum amount of DEDO’s participation is $1 million. Below-market rates and flexible terms are available, and a five-year term or less is preferred.

Notable uses for lenders include collateral shortfalls, cash-flow mitigation, 504 interim financing, start-up working capital and nonprofit financing.

 

TAX INCENTIVES

The State of Delaware has adopted a clear, bipartisan policy to attract new business and encourage the expansion of existing operations. Key tax features include:

  • No State or local general sales tax.

  • No personal property or inventory taxes.

  • Real property taxes are among the lowest in the country.

  • Property tax relief for new construction and improvements of existing property.

  • The exemption of certain investment and holding companies from corporate income tax.

  • The adherence of the State tax structure to the federal definition of corporate net income so that companies may take full advantage of any federal tax law change, such as more rapid depreciation of newly purchased assets.

  • Port of Wilmington foreign trade zone allows the deferment of import taxes.

  • Public Utility Tax rebates of 50% on increased consumption for qualifying industries and reduced rate for manufacturers and agricultural processors.

Business Finder’s Fee Tax Credit: Created to incentivize existing Delaware businesses to leverage relationships with suppliers, customers and other businesses to relocate to Delaware. Both the existing Delaware business and new relocating business are eligible for tax credits. The credit is equal to $500 multiplied by the number of full-time Delaware employees of the new business firm each tax year for three years following the date in which the new business firm is certified in Delaware. The goal is to get more businesses to relocate to Delaware, leading to job creation, increased tax revenues and stronger supply networks. Learn more about the Business Finder’s Fee Tax Credit .

Clean Energy Technology Device Manufacturers’ Tax Credit: This tax credit is applicable to clean energy technology device manufacturers of solar power devices, fuel cells, wind power devices and geothermal power devices. Those eligible can qualify for tax credits of $750 for each qualified employee. To be eligible, manufacturers must hire five or more qualified employees or make an investment of at least $200,000 ($40,000) per qualified employee and apply within three years of opening.

Historic Preservation Credit: Offers up to 100% tax credit rebate on qualified expenses made during the rehabilitation of any certified historic property. Tax credits may be used against personal income or bank franchise tax burdens, with credits ranging from $5,000 to $20,000, not to exceed the state’s yearly fiscal limit of $5,000,000. Learn more about the program through Delaware’s Division of Historical and Cultural Affairs .

Industrial Public Utility Tax Rebate: Industrial firms that meet criteria for targeted industry tax credits are eligible for a 50% rebate off the Public Utilities Tax on new or increased consumption of gas and electricity for five years.

Job Creation Tax Credit: Allows for eligible businesses engaged in qualified activities to receive tax credits against corporate or personal income taxes, gross receipts tax and public utility tax. The business must hire five or more qualified employees, make an investment of at least $200,000 ($40,000 per qualified employee) and operate in a qualified facility.

Research and Development (R&D) Tax Credit: Qualified businesses with R&D expenses are eligible for Delaware R&D tax credits for the taxable year equal to:

  • 10% of the excess of the taxpayer’s total Delaware qualified R&D expenses for the taxable year over the taxpayer’s Delaware base amount
  • 50% of Delaware’s apportioned share of the taxpayer’s federal R&D taxes credit using the alternative incremental credit method (under Section 41(c)4 of the Internal Revenue Code).

Credit is limited to 50% of the Delaware income tax liability. In addition, under House Bill 318 , Delaware doubled the R&D tax credit available to smaller businesses, while keeping in place the annual cap of $5 million for the credit as whole. Under this act, businesses with less than $20 million average annual gross receipts for the most recent four years are entitled to a credit equal to 100% of the corresponding federal credit.

Tax-Exempt Bond Financing: New or expanding businesses, governmental units and certain organizations exempt from federal income taxation can be eligible for statewide financial assistance in the form of tax-exempt bonds through the Delaware Economic Development Office (DEDO). Tax-exempt financing may be cost-effective for projects involving the issuance of more than $750,000. All applications are reviewed for impact on Delaware’s economy. Eligible projects include the following major categories:

  • Qualified 501(c)(3) Bonds: Tax-exempt bonds can be issued for the benefit of organizations that are tax-exempt under Section 501(c)(3) of the Code, if 95% of the net proceeds of the bonds are used by the organization in furtherance of its exempt purpose. Depending on the project being financed, certain other limitations may apply.

  • Exempt Facility Bonds: Tax-exempt bonds can be issued to finance certain types of utility projects, including sewage facilities, solid waste disposal facilities, facilities for the local furnishing of electricity and gas, and other types of facilities.

Veterans Opportunity Credit: An incentive to hire veterans who served overseas in conflicts since 2001. It is based W-2 wage and aimed at qualified employers located in Delaware that hire one or more qualified veterans. The credit can be taken against the following taxes: Bank Franchise Tax, Corporate Income Tax, Personal Income Tax and Insurance General Premium Tax. The Credit shall be 10% of the gross wages, but shall not exceed $1,500 by a qualified employer to a qualified veteran. This is a refundable credit. No qualified veteran counted for the Veterans Opportunity Credit can be counted in determining the credit under the following credits: Blue Collar Jobs Credit, New Economy Jobs Credit and Business Finder’s Fee Credit.

 

 

WORKFORCE DEVELOPMENT

Governor’s Blue Collar Grant Program (BCGP): Delaware companies—whether they are relocating, existing and/or expanding their business—may qualify for occupational skills upgrade training for their workforce. BCGP is funded through Delaware Unemployment Taxes. A portion of the funds are shared by the Department of Labor to provide Employment & Training services for the unemployed population and the Economic Development Office – Workforce Team who focuses on providing training grants for relocating and existing companies. These funds are available to train entry-level employees up to font-line supervisors. All training is industry-specific to meet the needs of the company and its employees. The funds can be used in multiple ways and for various types of training programs such as: basic skills, industry skills, pre-employment and on-the-job training. Various methods of training are available: on-line instruction, classroom instruction and hybrid instruction.

Governor’s Education Grant for Unemployed Workers: This program aims to help qualified individuals with training costs to learn a new skill or upgrade a current skill, and is designed to help those who lost jobs due to the current economic climate.

Governor’s Workforce Development Grant: Working adult students who meet enrollment, employment and income eligibility requirements may be eligible for $2,000 for one academic year. To qualify, applicants must be:

  • 18 years old or older
  • A High School graduate or GED recipient
  • A resident of Delaware and a U.S. citizen or eligible non-citizen

Eligibility requirements:

  • Must be employed by a company in Delaware.
  • Employees of government agencies, hospitals and nonprofit agencies are not eligible.
  • Part-time or temporary employment at any eligible company qualifies.
  • If employed full-time, employer must be an eligible small business with 100 or fewer employees.
  • Must attend a participating Delaware school in Delaware on a part-time basis

For more information on these incentives visit http://dedo.delaware.gov.