Maine Incentives and Workforce Development Guide
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Cluster Initiative Program: To stimulate the growth of technology businesses and infrastructure in Maine, the Maine Technology Institute’s Cluster Initiative Program makes competitive awards up to $50,000 for feasibility and planning on a rolling basis and up to $500,000 semi-annually for collaborative initiatives that boost the strength and scale of Maine’s high-potential technology intensive clusters.
Maine Technology Asset Fund: A competitive award program funded by Maine State bond proceeds. The awards must be used to fund capital and related expenditures supporting research, development and commercialization projects that will lead to significant economic benefits for Maine.
R&D Seed Grant Program: Seed Grants of up to $25,000 are offered three times a year by the Maine Technology Institute to support early-stage research and development activities for new products and services that lead to the market. Funded activities may include activities such as proof of concept work, prototype development, field trials, prototype testing, pilot studies, or technology transfer activities.
R&D Development Loans: Loans of up to $500,000 per project can be made available by the Maine Technology Institute to support research and development of new products and services that lead to market, including prototype development and testing, patent applications, small scale manufacturing and scale up for manufacturing with limited production. Awarded three times per year. Match required. All projects must fall under one of Maine’s seven technology clusters.
Techstart Program: This grant program is offered to individuals and companies across Maine looking to develop their new ideas and products. Grants are awarded up to twelve times each year, for up to $5,000 per project. Funds must not be readily available from another service provider. Grants may support specific activities such as business plan development, intellectual property filings, market analysis or planning and preparation activities related to Federal SBIR/STTR Phase I grants or Federal Broad Agency Announcement for technology development. Projects must have defined outcomes and endpoints for the specifically funded scope of work not to exceed six months. Requires 1:1 cash or approved in-kind match.
Commercial Loan Insurance Program: Insures a portion of a loan to a business made by a participating financial institution. Insurance Types:
- Pro-rata: covers a certain percentage of lenders loss after a default and liquidation, up to 100%.
- Leveraged: Covers a certain percentage of lenders loss up to 25% of the loan amount at the time of default.
Small Enterprise Growth Seed Fund (SEGF): Provides Maine companies and entrepreneurs access to patient sources of venture capital. The fund is a $9 million dollar revolving, evergreen fund. The SEGF is a professionally managed venture capital fund that invests exclusively in Maine companies that demonstrate a potential for high growth and public benefit.
State Small Business Credit Initiatives (SSBCI): $13.2 million in funds will help create new private sector jobs and spur more than $132 million in additional small-businesses lending in the state. The funding will take place in three stages, with the first allocation of $4.3 million now taking place. The SSBCI funds will be used to recapitalize three existing, successful programs:
- $7 million will be available to a group of 15 regional economic development agencies to make loans to businesses in their area. See FAME’s Regional Economic Development Revolving Loan Program.
- $3.2 million will be allocated to FAME for the Economic Recovery Loan Program loans of up to $1 million that meet the program’s underwriting requirements, which can be used statewide;
- $3 million will be allocated to the Small Enterprise Growth FundMaine’s state-run venture capital fund.
Economic Recovery Loan Program: Provides subordinate (gap) financing to assist businesses in their efforts to remain viable and/or improve productivity. From time to time, funds are used to address specific business community needs. Maine-based businesses that exhibit a reasonable ability to repay the loan and demonstrate that other sources of capital have been exhausted are eligible for loans up to $750,000 maximum loan amount. Loans of up to $1 million may be available if substantial public benefit is demonstrated and sufficient funds available.
Commercial Facilities Development Program: The Maine Rural Development Authority’s Commercial Facilities Development Program provides financial resources to assist in the development of new commercial facilities and the acquisition and redevelopment of nonproductive commercial facilities for subsequent return to productive use through sale or lease. The MRDA can serve as lender, principal developer, partner or investor in the acquisition of property and redevelopment of existing commercial properties. Investments for the program are available up to $500,000. Municipalities or other local entities must provide 25% of the funding provided by the authority. The authority may waive this requirement given a lack of local resources.
Maine Economic Development Venture Capital Revolving Investment Program: Designed to allow the State to invest as an equal partner with others in eligible private venture capital funds to support emerging and early-growth businesses in Maine. It is intended to utilize experienced professional fund managers to increase the probability of successful investments in recipient companies and is available only to established venture capital funds that have a strategy for the creation and retention of jobs in Maine through:
- Investments in Maine high-growth businesses.
- A marketing and technical assistance plan.
- Appropriate monitoring of its investments.
- A technical assistance program to assist the businesses in which it invests.
- A process for complying with proposed measurement and goals.
Agricultural Marketing Loan Fund: Provides low interest financing to help eligible businesses employ new and innovative technologies and processes in order to improve, expand and enhance the manufacturing, marketability and production of Maine-made agricultural products. Funds may be used for the design, construction or improvement of facilities such as commodity storage buildings and packing and marketing facilities. Funds may also be used to purchase or retrofit machinery and equipment. Depending on the type of project, the loan amount is up to 90% of total project cost, if project cost is $100,000 or less; up to 75% of total project cost, if project cost is more than $100,000; and up to 45% of total project cost, if project is related to the production of potatoes. Maximum loan amount is $250,000, and acquisition costs for start-up enterprises is limited to $100,000.
Energy Conservation Loan Program: Funded through the Maine Public Utilities Commission (PUC), it provides low-interest loans to improve energy efficiency in Maine workplaces. Loan amount is 90% of project cost, up to a maximum loan amount of $35,000 and the interest rate is 1%, fixed for the term of the loan. Loan term is usually five years. Longer terms may be negotiated depending on the useful life of the assets being financed or additional collateral pledged.
Community Development Block Grant Program (CDBG): Provides funding and technical support for community projects that meet economic development objectives and lead to job creation or retention for Maine residents with low to moderate incomes.
Small Enterprise Growth Fund (SEGF): Provides initial investments, typically between $150,000 and $350,000, in patient capital to small businesses that demonstrate a potential for high growth and public benefit. Funds must be matched in cash. Investments from the fund may be structured as convertible debentures or direct purchases of preferred stock.
Technology Tax Credits: Maine offers tax credits and sales tax exemptions for businesses engaged in certain specialized areas. In general, R&D tax credits are based on federal IRS rules and applied for as part of a company’s state corporate tax return. Sales tax exemptions are applied either at the time of purchase using an Industrial Users Blanket Sales Tax Certificate of Exemption or as a refund with the Refund Form.
Research Expense Tax Credit: Based on a percentage of the federal credit for increasing research activities. Limitations: the credit is equal to 5% of the excess qualified research expenses over the previous three-year average plus 7.5% of the basic research payments under IRC § 41(e)(1)(A). For corporate taxpayers, the credit is further limited to 100% of the first $25,000 in tax liability plus 75% of the tax liability in excess of $25,000. The credit cannot be carried back, but can be carried forward for up to 15 years.
Super Research & Development Credit: Based on qualified research payments exceeding 150% of the average for the three-year period prior to the effective date of the credit. Limitations: the credit is limited to 50% of the tax otherwise due after all other credits. Further, the credit cannot reduce tax liability below the amount due the previous year after credits. The credit cannot be carried back, but can be carried forward for up to five years.
High-Technology Investment Tax Credit: Based on the adjusted basis of eligible equipment. Limitations: the credit is limited to high-tech equipment purchased (or leased) by businesses engaged primarily in high-tech activities. The credit cannot reduce tax to an amount below the previous year’s tax after credits. The credit cannot be carried back, but can be carried forward for up to five years.
Sales Tax Exemptions: Maine state sales tax exemptions are available for manufacturing, R&D, custom computer programming, fuel & electricity and biotechnology.
- Manufacturing. Sales of machinery and equipment used by the purchaser directly and primarily in the production of tangible personal property for later sale or lease and in the generation of radio and television broadcast signals by broadcast stations are eligible for a sales tax exemption. In addition, items consumed or destroyed directly or primarily in production, and repair and replacement parts for qualified production equipment are exempt from sales tax.
- Research and Development. Sales of machinery and equipment used by the purchaser directly and exclusively in research and development is eligible for a sales tax exemption.
- Fuel & Electricity For Use In Manufacturing. Manufacturers are exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing operation.
- Biotechnology. Sales of machinery and equipment used by the purchaser directly and primarily in a biotechnology application are eligible for a sales tax exemption.
Pine Tree Development Zone Program: To provide new, and improve existing, employment opportunities; improve and broaden the tax base; and improve the general economy of the State of Maine, the Pine Tree Development Zone program offers eligible businesses the chance to greatly reduce or virtually eliminate state taxes for up to 10 years. Eligible Sectors include Biotechnology, Aquaculture and Marine Technology, Composite Materials Technology, Environmental Technology, Advanced Technologies for Forestry and Agriculture, Manufacturing (including Precision Manufacturing), Information Technology and Financial Services.
Seed Capital Tax Credit: Designed to encourage equity and near-equity investments in eligible Maine businesses, directly and through private venture capital funds. State income tax credits may be authorized to investors for up to 60% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
Maine New Markets Capital Investment Program: Provides refundable state tax credits of up to 39% to investors in qualified community development entities (CDEs) that reinvest in certain businesses in eligible low-income communities in Maine. The program is modeled after the federal New Markets Tax Credit Program, and is administered by the Finance Authority of Maine, in cooperation with Maine Revenue Services and the Maine Department of Economic and Community Development. In order to be eligible to participate in the program, a CDE must be certified as a qualified community development by the Secretary of the United States Treasury, and be a party to an existing allocation agreement with the Department of Treasury’s CDFI Fund that is in effect and not subject to revocation or cancellation. The allocation agreement must have Maine in its service area.
Tax Increment Financing (TIF): Provides municipalities with a local tool to finance the cost of private development. Maine municipalities may redirect some or all of the new property taxes from an investment project within a designated district to assist in that project’s financing. Municipalities have three disbursement options for the tax increment:
- Give directly to the investing business to pay project costs.
- Use to retire bonds issued as part of the project.
- Retain for allowable economic development.
TIF districts may be designated for up to 30 years. Bonds may be issued for up to 20 years. Financing terms are determined by the municipality. Community designation of a TIF district requires proper public notice, a public hearing, and a majority vote of the municipal legislative body.
Employment Tax Increment Financing (ETIF): A state program that helps new and established Maine businesses hire new employees by refunding to the business 30% to 80% of the state withholding taxes paid by the new employees for up to 10 years. The reimbursement rate rises with the level of local unemployment, with those in Pine Tree Development Zones receiving the highest rate. Retail-only and not-for-profit businesses are not eligible. To qualify, new employees must receive an annual income greater than the county’s per-capita personal income, and be provided access to group health insurance and an Employee Retirement Income Security Act (ERISA) qualified retirement program. Qualifying businesses can begin the application and approval process as soon as they reach the point where they plan on hiring five or more net new employees over the next two years. They then typically apply for and receive their reimbursement in the first quarter of the next fiscal year. Businesses in Pine Tree Development Zones will enroll in the ETIF program as part of their PTDZ application.
Certified Media Production Tax Credit: A media production company engaged in a media production that is certified by the Department of Economic and Community Development is allowed a credit equal to the Maine income tax related to the income from the certified media production. The credit may not reduce the entity’s tax liability below zero and unused credit amounts may not be carried over to prior or future years. The program is designed to encourage the creation of production related jobs in Maine, improve the general economy of the State, and attract visual media productions to the State.