Types of Economic Development Incentives for Businesses
What are Economic Development Incentives for Businesses?
An economic development incentive is generally known as cash or non-cash (tax benefits, in-kind support) assistance provided by federal, state, and local governments. These incentives are employed to attract or retain business operations within their jurisdiction. Incentives come in many forms, from financial support to in-kind-support, and tax credits.
What are the Different Types of Business Incentives?
There are three categories when it comes to types of economic incentives. These categories are statutory by right, statutory negotiated, and discretionary negotiated.
- Statutory by Right: Economic development incentives that are considered statutory by right are benefits that a company can earn by right if that company meets certain thresholds or performs specific activities.
- Statutory Negotiated: Similar to the statutory by right incentives, statutory negotiated incentives are earned by meeting certain thresholds or performing specific activities, but require additional planning. Pre-applications and/or pre-approvals are necessary prior to securing and receiving the benefit.
- Discretionary Negotiated: Discretionary incentives are only earned through a process of negotiation. The allocation of these incentives is at the sole discretion of the government. These types of incentives are often left unused by businesses that lack expertise in this area. This is where Maxis Advisors excel.
Why Pursue Economic Development Incentives?
Incentives are used to attract and retain business. They can offset up-front costs through lowered real estate costs, cash grants, infrastructure improvements, and more. Additionally, incentives can offset ongoing operational costs through payroll tax rebates, free workforce training programs, lowered utility rates, and more. These incentives are put in place to ‘woo’ companies and win their business.
Don’t Leave Money on the Table!
To not aggressively pursue incentives is to leave money on the table. Historically, Maxis’ clients have left 70-90% of available funding behind, simply because they were unaware of the opportunity or lacked the expertise in strategic negotiation. These opportunities are available from the planning stages of a new operation through the lifespan of the business. Whether a company is building a new facility, expanding an existing facility, or performing substantial routine capex, there are incentives to be earned.
Let the Experts do the Work
Maximizing credit & incentives opportunities requires a comprehensive understanding of the state and local economic development landscape, access to critical data, strategic negotiation experience, and a consistent focus. Maxis Advisors’ team of experienced former-economic development officials and incentives experts help companies increase ROI by as much as 20% or more through our comprehensive services. We do the leg work so that you can focus on what matters most to you and your company.
Get in touch with Maxis Advisors today! Let’s talk about your next project.