Incentives & Financing
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SNAPSHOT:
Reducing the cost of business. Economic Development staff will coordinate with state and local partners to reduce bottom line costs associated with construction, equipment, and employment. We regularly implement new initiatives to improve the operating environment. Our toolbox includes:
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Local Incentives. Fee reductions, recycling zone, Foreign Trade Zone.
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Financing & Funding. Revolving loan fund, startup funding.
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State Tax Credits. Savings for manufacturers, alternative energy and transportation, R&D, equipment purchases, hiring and investing.
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Hiring & Training Incentives. Tax credits for job creation and reimbursement for employee training.
Local Programs
Local Incentives
Development Fee Reduction
Public facilities impact fees on commercial and residential development t within the city's infill zone are eligible for a 50% reduction. The infill zone is roughly bounded by Childs and Glen avenues; and X Street and Bear Creek. Other reductions are available for affordable housing projects, accessory dwelling units, and single-family homes below the average home size. Fee deferrals are also available.
WHO:
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Developers
WHAT:
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Fee reduction for commercial and residential development
Opportunity Zones
IRS (see Merced Opportunity Zones)
Merced's seven Opportunity Zones provide investment opportunities for individuals seeking to defer and reduce capital gains taxes through reinvestment. Residential, commercial and industrial projects are eligible for investment. Developers with projects in a zone and businesses located in a zone may find investors through an Eligible Opportunity Fund.
WHO:
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Individual Investors
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Developers
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Businesses seeking investment
WHAT:
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Defers and reduces capital gains taxes for investors in the zones
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Investment in residential, commercial, industrial projects
- Merced has 7 zones
PG&E Economic Development Rate (EDR)
PG&E is one of two electricity providers in Merced. Businesses using at least 200 kW may be eligible for PG&E's EDR Enhanced discount of 30% over 5 years.
WHO:
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Businesses using at least 200kW
WHAT:
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30% discount for 5 years
Foreign Trade Zone
Merced County Community and Economic Development Department
A U.S. Foreign Trade Zone (FTZ) is a designated area which, for Customs purposes, is considered outside the U.S. Nearly any imported merchandise can be brought into a zone for almost any kind of manipulation, duty-free. The City of Merced is part of the Merced County Foreign Trade Zone.
WHO:
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Companies importing goods for sale or production
WHAT:
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Duty deferral or elimination
Recycling Market Development Zone (RMDZ)
The Merced County RMDZ assists businesses that stimulate markets for recycled material, including plastics, glass, yard waste, compostable organics, inert materials, and waste tires. Assistance includes a recycling equipment tax credit, technical assistance, and local business incentives. In addition, the program provides low interest loans for 50% of the project, up to a maximum of $1 million.
WHO:
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Manufacturers who repurpose waste products
WHAT:
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Low-interest loans and grants
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State tax credits
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Technical assistance
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Additional local incentives
Financing & Funding
Revolving Loan Fund (RLF)
Valley Sierra Small Business Development Center (SBDC)
The RLF is used for gap financing to supplement SBA or private financing. Loans range from $5,000 to $375,000, and one permanent job must be created or retained per $10,000 RLF dollars loaned. The SBDC administers the fund in partnership with Merced County and assists businesses in becoming "loan ready."
WHO:
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Businesses that create jobs
WHAT:
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Gap financing to provide capital for job creating projects
UC Merced Venture Lab – Proof of Concept Fund
The Proof of Concept Fund allows startups to close the gap between a technology's stage of development achieved at the university and the stage of development necessary for commercialization.
Read more about UC Merced Venture Lab...
WHO:
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Startups (members of Venture Lab)
WHAT:
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Funding to license or option a UC Merced technology
FINANCING AND FUNDING PREPARATION
Valley Sierra SBDC
Clientele:
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Existing businesses and startups
Financing-related Services:
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Business Plans
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Financial Analysis
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Financing Preparation
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Identification of Financing Sources
(public and private)
UC Merced Venture Lab
Clientele:
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Startups from UC Merced and businesses adapting UC Merced technologies
Funding-related Services
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Mentoring
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Pitch Sessions
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Proof of Concept Fund
Read more about business assistance resources in Merced...
State Tax Credits
California Competes
business.ca.gov/california-competes-tax-credit
Cal Competes is a 5-year tax credit obtained through a competitive process during several open application periods throughout the year. The amount of the credit is approved by the California Competes Tax Credit Committee, based on a competitive ratio of aggregate jobs & investment created by the business.
WHO:
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Businesses that locate or expand in California
WHAT:
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Tax credit for job creation, competitive wages, and investment (pre-negotiated)
California Electric Vehicle Infrastructure Project
Incentives and financing options for property and business owners for the purchase and installation of electric vehicle charging infrastructure at publicly accessible sites.
WHO:
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Business and property owners
WHAT:
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Tax credit for electric vehicle charging infrastructure
Manufacturing and R&D Equipment Exemption
Partial exemption from sales and use tax on the purchase or lease of qualified machinery and equipment used in manufacturing, research and development, and electric power generation or production, storage or distribution. Qualifying purchases and leases include:
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Machinery, equipment, component parts
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Operational equipment
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Property used in pollution control
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Special purpose buildings and foundations
WHO:
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Manufacturers
WHAT:
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Partial sales tax exemption for equipment and property associated with manufacturing, R&D, and pollution control
Sales and Use Tax Exclusion (STE)
Sales and use tax exclusion on qualifying property which may include equipment used to process or use recycled feedstock, or to manufacture alternative source products (used for renewable electrical generation) or emerging transportation related technologies.
WHO:
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Manufacturers (alternative energy and advanced transporation)
WHAT:
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Tax credit for sales and use tax on components and systems
Hiring & Training Incentives
See Hiring & Training for additional employment resources for businesses.
New Employment Credit
The New Employment Credit (NEC) is available to employers in high unemployment and poverty areas that hire qualified full-time employees. Qualifying wages are those wages exceeding 150% but not more than 350% of the minimum wage.
WHO:
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Non-retail businesses in qualifying census tracts (mapped on website)
WHAT:
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Tax credit for hiring qualified workers at designated wage levels
Employment Training Panel (ETP)
www.etp.ca.gov Local Partner: Worknet of Merced County
ETP is a California program that provides a cash reimbursement for training costs incurred by employers for workers who successfully complete the program and are retained on the job for a set amount of time. Employers determine their training needs and can use their preferred providers, such as community colleges, to deliver the training.
WHO:
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Priority industries (ag, health, manufacturing, food processing, transportation, technology and others)
WHAT:
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Reimbursed employee training
SOURCES USED ON THIS PAGE:
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Websites of respective programs (March 2022).