Recently, I have had a number of inquiries regarding tax credits and other incentives that may be available to small or mid-sized businesses. Usually, these discussions also involve questions of where to gain access to additional capital to grow one's business.
In this month's column, I would like to note some interesting aspects of this country's small and mid-sized businesses generally, and then provide some general information on tax credits, incentives and capital access. In a follow-up column, I will try to provide additional, specific information on agency contacts, both locally and statewide.
First, it is almost mind-boggling how important small and mid-sized businesses are to both North Carolina and the country generally. The U.S. Small Business Administration provides information on companies employing fewer than 500 people and these businesses comprise:
* 99% of all employers,
* 51% of the private Gross Domestic Product,
* 47% of all sales, and
* 53% of the private workforce.
In addition, these companies provide over one-half of the technological innovations, and create between two-thirds and three-fourths of the new jobs in this country-representing nearly all of the net job growth during the past decade.
This information was provided to me by one of the statewide agencies in North Carolina-The Small Business and Technology Development Center (SBTDC), a business development service at the University of North Carolina in Chapel Hill (although its main office is located in Raleigh). I will be giving you more information on this excellent resource a bit later.
Although it seems that virtually all media coverage focuses on large companies, in fact, the incredible growth in the small and mid-sized business sector has largely evened out a significant reduction in employment in this country among the larger corporations. As I have addressed in earlier columns, this is due in part to recent mergers and acquisitions, particularly high-profile service industries such as banking and insurance.
However, these very merger and acquisitions have, in turn, spun off many smaller companies and provided an additional wave of entrepreneurs, often with hefty severance packages from their prior employers, that have generated significant growth in the small and mid-size business sectors during the last ten years.
Capital, of course, is the cornerstone for all new businesses and for the growth of all existing ones. One excellent resource that the SBTDC publishes is called Capital Opportunities for Small Businesses, 12th Edition ($12.00). It is published annually, and while intended as a resource guide for professionals-lawyers, bankers, CPAs, economic developers and business consultants, it nonetheless is an informative source of additional agencies for information and various sources for capital and tax credit and incentive programs.
The SBTDC publication is a fairly comprehensive information guide on various capital resources in North Carolina, including various debt and equity alternatives. It also provides additional information for certain federal programs. As noted below, the information is also available on-line and the SBTDC staffs 16 offices across the state (including Winston-Salem and Greensboro). In next month's column, I will also provide additional information on certain local agencies that may be of assistance to you as well.
Doing one's homework is the name of the game in the area of tax and trade credits or the availability of other incentives or capital. A number of programs exist-most are extremely specific, but if you qualify, they are excellent sources. However, there is no such thing as "free money"-notwithstanding many infomercials on television-with two exceptions.
First, the "Governor's Fund" provides funds in award amounts of $100,000 to companies looking to establish operations or expand current ones in North Carolina. Typically, new job creation is required and there are a number of guidelines to follow, but for certain companies, this is free and available money!
Secondly, the federal government runs a "Small Business Innovative Research" (SBIR) program. Only small businesses may apply for certain research and development funds, typically equal to one and one-half percent of a more than $100,000,000 budget set aside for this purpose. Various federal agencies participate in this program. So long as the business employs fewer than 500 employees, is American owned and operated, and employs the principal researcher, the company is potentially eligible to apply. Typical awards are in the amounts, depending on the program then available, of $100,000 or $750,000.
Set forth below is the contact information for these two programs:
Governor's Fund
Department of Commerce
Business and Industry Development
Mike Wilkins, Assistant Secretary
To reach the SBIR, contact:
Kay Etzler
SBTDC Central Carolina Regional Center
608 Airport Road, Suite B
Chapel Hill, North Carolina 27514
Telephone Number: (919) 962-8297
E-Mail Address: ketzler@sbtdc.org
Before ending this month's column, let me provide to you some information with respect to the SBTDC, as well as several web sites that may be of interest to you in connection with some of the matters I have mentioned above, as well as others that I will address in next month's column.
To reach the SBTDC:
Small Business and Technology Development Center
Scott R. Daugherty, Executive Director
333 Fayetteville Street Mall, Suite 1150
Raleigh, North Carolina 27601-1742
Telephone Number: (919) 715-7272
Web sites that may be of interest:
sbtdc.org
sba.gov/sbir
ace-net.sr.unh.edu
usinvestor.com
ncga.state.nc.us/html1999/statutes/statutes.html
I hope that this information and these additional sources will be helpful to you and your business.
Rich Drake is a Member of Womble Carlyle Sandridge & Rice, PLLC, practicing in the Corporate and Securities Group in Winton-Salem. Mr. Drake advises clients on practical approaches to achieve desired business outcomes in a variety of corporate, securities, financing and business technology matters.