New and expanding businesses can access a wide variety of state and federal funding sources for start-ups and expansions in the Forrest City area.

Industrial revenue bonds, commonly known as "Act 9 Bonds" in Arkansas, provide manufacturers with below-market financing. Tax-exempt bonds can be used to purchase land, buildings, and equipment. Taxable bonds may be used for distribution facilities and business headquarters and for manufacturing projects that exceed $10 million.

To qualify for tax-exempt bonds, a borrower must meet the following criteria:

• The firm must be engaged in manufacturing, processing, or other activities directly related to manufacturing or processing.
• The business' total outstanding tax-exempt bond debt nationwide cannot exceed $40 million.
• The total capital cost may not exceed $10 million for a six year period.
• The capital expansion must create new jobs.

The advantages of tax-exempt industrial revenue bonds are:

• Tax-exempt rate - On average, most issues will be 80% of prime.
• Long terms - Terms are up to 30 years.
• Assumability - Bonds are assumable if the business is sold to a qualified buyer.

For businesses that have a financial history but are unable to sell industrial revenue bonds to the public, the Arkansas Department of Economic Development can guarantee up to $4 million of bond issue. This allows the bonds to be sold at a higher credit rating, thus lowering the effective interest rate.

The Arkansas Development Finance Authority (ADFA) also provides a bond guaranty program that enables a business to obtain below market, fixed rates. ADFA can guarantee up to $6 million. Combined with the guaranty from the Arkansas Department of Economic Development, a business could obtain up to $10 million per project.

Arkansas Capital Corporation (ACC), a preferred lender for the Small Business Administration, makes long-term, fixed rate loans to start-up and existing businesses. ACC loans can be used for almost everything from new building and equipment to working capital. They may be used in combination with bank loans, bond issues, or other sources of financing.

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©2001 Forrest City Area Chamber Of Commerce. All Rights Reserved.
203 N. Izard; Forrest City, AR 72335
870-633-1651 fax: 870-633-9500

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