Newly Signed Economic Development Bill Offers Smorgasbord Of Approaches
Gov. Peter Shumlin has put his signature on an economic development bill designed to provide incentives to both businesses and workers.
The bill signing ceremony took place at Darn Tough Socks in Northfield, which is planning a major expansion.
Darn Tough President and CEO Ric Cabot says the bill responds to some fundamental problems businesses face.
“We want to make sure that not only people stop leaving the state, but people come here and they see Vermont as a good place to work, as a good place to start a family and to grow a family,” Cabot says.
The bill expands existing program and contains some new initiatives.
The most controversial provision changes a tax incentive program to help businesses create new jobs. The change lowers the wage requirement for companies in some parts of the state with higher unemployment. Opponents had argued that the wage is too low.
Different sections of the bill benefit different constituencies. The elimination of a ‘cloud tax’ on software accessed remotely was hailed by the Vermont tech sector.
The bill provides down payment assistance for first time home buyers in hopes of helping workers.
There’s also money for education and training.
One little-discussed provision increases from $75,000 to $250,000 annually the amount that alternative lenders – someone other than a bank or credit union – can loan to a Vermont business without needing a license from the state.
“The limit has been raised a couple of times in the past several years. Some of that has been a recognition that people need more money to build things or expand their business,” says Commissioner of the Department of Financial Regulation Susan Donegan.
"The [loan] limit has been raised a couple of times in the past several years. Some of that has been a recognition that people need more money to build things or expand their business." - Susan Donegan, commissioner of the Department of Financial Regulation
Access to traditional loans has become more difficult in the post-recession era.
Cairn Cross, co-founder of Fresh Tracks Capital in Shelburne, a venture capital firm, says the lower limits on alternative lending meant small and start-up companies couldn’t get the loans they needed.
Instead, they ended up selling a portion of their business to investors, which wasn’t an attractive option to many. “They were kind of in no man’s land. They were probably too small or too young or too early for a bank or credit union. They were forced essentially to sell a piece of their company,” he says.
Cross says raising the loan limit for unlicensed lenders is a positive step that will most likely attract individual Vermonters who have the financial capacity to make loans.
He thinks the $250,000 loan limit is too low to attract alternative finance companies from out of state.
Ultimately, Cross would like to see no license requirements for alternative lending, similar to the approach taken by many other states.