Mainebiz Special Editions

V O L . X X V I N O. X V I 52 Fact Book / Doing Business in Maine B U S I N E S S R E S O U R C E S T he Finance Authority of Maine, or FAME, a quasi-independent state agency, is a leading financial resource that expands business and educational opportunities through its willingness to invest at greater risk based on public benefit. FAME assists with the start-up, expansion, and growth of Maine busi- nesses by working closely with Maine's lending community to improve access to capital. "FAME's vision is to help lead the creation of good paying jobs for Maine residents by working at the nexus of economic and workforce devel- opment. We exist to take on greater risks for public benefit," says FAME CEO Bruce Wagner. "Without FAME, less investment would go into Maine's economy. A lot of businesses and jobs would not exist." Programs and services Credit enhancement, risk reduction Commercial Loan Insurance Program: Loan insurance helps cover a bank's credit risk. For a business, it may mean the difference between obtaining a loan, going out of business, or never get- ting the opportunity to start a business. Commercial loan insurance represents the majority of FAME deals. It can help tip the balance in favor of a deal for financial institutions as they consider applications from business custom- ers that don't have enough cash flow or collateral to represent a viable risk on their own. Loan insurance is available for almost any prudent business activ- ity, and insures up to 90 percent (100% for veterans) of a loan to a maximum FAME insurance exposure of $7.5 mil- lion. is maximum insurance amount is set at least annually in accordance with FAME's Direct Loan and Loan Insurance Credit Policy. In FY 2018, FAME provided approximately $34 million in loan insurance to lending institutions for loans to 235 Maine busi- nesses, leveraging approximately $64 mil- lion in financing. This helped to create and retain approximately 3,066 Maine jobs. Direct loans The FAME Direct Loan: Provides subordinate or gap financing to businesses affected by their current economic situation. FAME provides these loans directly to Maine busi- nesses to help them succeed and at times turn around. We also provide such loans when a business seeks to grow often in the late start-up phase when they may already have equity but need sub-debt to reach their next level of operations. In both cases, FAME is lending at greater risk for public benefit than our lending part- ners are able to do. In FY 2018, FAME provided loans to twelve Maine businesses totaling approximately $2.5 million. This helped to create and retain 262 Maine jobs. Partner-Focused Purpose FAME partners well with and provides services to other entities such as: contractor management, loan underwriting and servicing, fund management, as well as board administrative support: Maine Department of Agriculture, Conservation and Forestry — Agricultural Marketing Loan Fund (AMLF): Provides 5% fixed-rate loans to natural resource based businesses that employ new and innovative technologies and processes in order to improve, expand, and enhance the manufacturing, marketability, and production of Maine-made agricul- tural products. Funds may be used for the design, construction or improve- ment of facilities such as commod- ity storage buildings and packing and marketing facilities. Funds may also be used to purchase or retrofit machinery and equipment. In FY 2018, AMLF provided five loans to two projects totaling $632,200. Maine Department of Agriculture, Conservation and Forestry — Dairy Improvement Fund: Provides loans to assist dairy farmers in making capital improvements to maintain and enhance the viability of their farms. Maine Department of Environmental Protection and Maine Municipal Bond Bank — Commercial Assistance Loan Program: A new program designed to help businesses finance the renovation, removal, disposal or replacement of all or any part of certain oil storage facilities or tanks and certain air quality improve- ment equipment. Maine Potato Board and Maine Department of Agriculture, Conservation and Forestry — Potato Marketing Improvement Fund Program (PMIF): Provides 5% fixed-rate loans to businesses for the construction and/or retro-fitting of potato packing and storage facilities. Funds may be used for new construc- tion or improvements to storage and/ or centralized packing facilities, as well as for the acquisition of packing, siz- ing, washing and drying equipment. In addition, PMIF funds may be used to fund programs that improve the economic viability of the potato indus- try. Such improvements may include irrigation equipment and water source development projects. The Maine Rural Development Authority (MRDA): FAME provides underwriting and administrative services to the Maine Rural Development Authority (MRDA). e MRDA was established by the Maine Legislature in 2002 to provide financial assistance to communities and their development partners to help develop speculative commercial and industrial buildings and to help develop/redevelop underutilized commercial industrial properties. e primary focus of the MRDA's activities is in the rural areas of Maine that have traditionally not experienced the same level of economic development success regions as other parts of the state or have experienced major economic losses, such as plant closings and downsizings or are economically distressed. In FY 18, the MRDA provided one loan totaling $247,915. Revenue bonds Revenue Obligation Securities Program: Provides an opportunity for manufacturing businesses to access the tax-exempt bond market for funds to build and/or acquire real estate or machinery and equipment using tax-exempt Industrial Revenue Bonds issued by FAME. In FY 18, the program provided $49 million in bonds for various for-profit and non- profit organizations. Equity capital Maine Seed Capital Tax Credit Program: e Maine Seed Capital Tax Credit Program is designed to encourage equity and near-equity investments in eligible Maine busi- nesses, directly and through private venture capital funds. FAME may authorize state income tax credits or re-fundable tax credits to inves- tors for 50% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital. In calendar year 2018, FAME issued $5 million in tax credits out of the $5 million that was available under law. Maine New Markets Capital Investment Tax Credit Program: Modeled after the federal tax credit, this state program is designed to attract investment in economically distressed areas of Maine. An alloca- tion of tax credits may be provided for businesses that invest in "quali- fied community development enti- ties." e credit is equal to 39% of the qualified amount invested, and is spread over a seven-year period, with 7% allowed in year three and 8% in each of years four through seven. e credit may not be taken in the first two years after investment. "One-day" loans are now prohibited pursuant to rule and statute. e maximum aggregate amount of tax credit authority is set forth at $250 million, and the amount of tax cred- its claimed per fiscal year limited to $20 million. In FY 18, FAME issued $3.6 million in tax credits through this program. FAME offers financing to Maine small businesses Without FAME, less investment would go into Maine's economy. A lot of businesses and jobs would not exist. — Bruce Wagner FAME CEO

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