What is an Enterprise Zone?

An Enterprise Zone (EZ) is an area that has been designated by the Department of Community and Economic Development (DCED) as financially distressed and disadvantaged. A zone generally is comprised of several municipalities.

 What is the Purpose of an Enterprise Zone?

The purpose of an Enterprise Zone is to promote job growth and to help municipalities take advantage of business expansion opportunities when they arise. EZ's improve the capacity of local govemments and business communities by encouraging them to form public/private partnerships. In turn, these partnerships boost business investment within the zone. Increased business investment, job creation and sustained community self-sufficiency are the primary goals of the Enterprise Zone program.

 Who is eligble to apply for an Enterprise Zone designation?

Local governments, redevelopment authorities, nonprofit economic development organizations, and other nonprofit organizations and business district authorities are all eligible.

 How can my community achieve EZ designation?

Enterprise Zone areas must demonstrate that they are financially disadvantaged as measured by a statewide DCED index. The designation is also based upon DCED approval of a fiveyear strategy document which must be submitted by the applicant for a proposed zone. This strategy must be based on a structured survey of firms in eligible sectors that are located within the boundaries of the proposed Enterprise Zone. The purpose of the survey is to learn fi-om current business owners and managers what their best opportunities are for growth, what their most significant barriers are to growth, and what they consider to be the most effective ways in which local and state government can help them to grow.

 How long does the EZ designation last?

Enterprise Zones are designated for a term of seven years. A zone may request an extension of the designation for an additional two years, based on economic conditions and potential investment opportunities.

 What kinds of grants are available under the Enterprise Zone program?

Planning grants up to $50,000 (one time only). Basic grants up to $50,000 for up to 7 consecutive years. During this time period, basic grants may be increased up to $75,000 on two occasions, only if the Enterprise Zone entity is undertaking a cluster analysis, or some other activity that uses analytical tools to enhance the zone's development plans. This is not an entitlement program. Need and demonstrated progress must be documented prior to receiving these grants on a yearly basis. Competitive grants-to-loans up to $500,000 which can be loaned to private sector firms in the zone.

 What are the financial benefits of Enterprise Zone status?

Within the zone, revolving loan funds are established, which are supported by competitive grants-to-loans of up to $500,000 per project. Zone participants also have access to the lowest Pennsylvania Industrial Development Authority, Machinery and Equipment Loan Fund, Small Business First (PIDA/MELF/SBF) interest rates, tax credits for real property improvements, Socially and Economically Restricted Business (SERB) status for an advantage when bidding on state contram, Act II funding, and State Liquor License availability.

 How is the Revolving Loan Fund established?

Grants-to-loans funds are grants tiom the Commonwealth's New Communities Program to the local Enterprise Zone administrating agency. A Revolving Loan Fund (RLF) is established when competitive loans are repaid to the local administrating agency. The zone is eligible to apply for these grants as long as it has not exited the program. The desired end result here is to establish a healthy revolving loan fund - one that will continue to carry out the purposes of the program after the zone has exited the program.

 What are Competitive Grants?

Competitive grants are grants to the Enterprise Zone entity, which in turn provide loans to the eligible businesses for projects within the zone.

 What criteria are required for loan eligibility?

The local loans must be collateralized with a reasonable security position. A phase one environmental assessment must be completed for projects that involve the acquisition or improvement of real property. The benefiting business must be located within the zone; must create or retain jobs; must have market areas which are statewide or larger; and must provide full-time employment at a level substantially above minimum wage, with some tiinge benefits.

 What can the loans be used for?

Enterprise Zone competitive grants-to-loans can be used for up to 30% of the total project investment to acquire machinery and equipment. They are available for new business construction or building improvements, site improvements, infi-astructure, and in some special cases, for up to 40% of inventory or working capital needs. Competitive grants-toloans also can be used toward the cost of preparing business lease space, especially for facilities with fiber optic wiring. Costs of public infixstructure development and hazardous waste testing may also be considered, ifthe lack of conventional funding sources for such costs is documented. Competitive grants may not exceed 30% of total projea investment, and one full-time job must be created or retained for each $30,000 of loan capital.