Business Quarterly
July 28, 2010 |
|
|
|
Upcoming Events |
August 19, 2010
FAME Board Meeting
September 15 & 16, 2010
Along with it's regularly scheduled meeting, the FAME Board and staff will be touring York County and visiting area businesses and schools.
November 16, 2010
Save the Date for FAME's Annual Meeting - Showcase Maine. |
|
|
| FAME News |
Greetings from the FAME Commercial Division!
And a very Happy Summer to you all! Hopefully, you are taking advantage of this unprecedented summer weather and enjoying the benefits of living in Maine. Along with this enjoyment, we also hope you are providing benefits to the local economy and your fellow Maine business owners.
Since this is the end of our fiscal year, our Update is packed with some impressive FAME business activity statistics from the 4th quarter and year-end. As you will see from the following graphs and articles, FAME has ended the year with much in the way of business loan activity and assistance to numerous folks in the state of Maine.
The economy has been a challenge for most individuals, as well as for many businesses throughout the state. Because it is FAME's mission to assist lenders and businesses through these challenging times, activity in our commercial loan insurance products, as well as our direct loans, has been brisk. In order to meet the upcoming needs, FAME entered the market this year with enhancements to our commercial loan insurance that enable lenders to provide cash flow relief by obtaining 40% insurance on loans they currently have with their business customers. Businesses that have been able to restructure their bank debt with this FAME insurance, now have a second chance at keeping their doors open and weathering the economic storm. This expansion to our typical commercial loan insurance programs resulted in relief for many of the state's businesses during FY 2010.
FAME has provided a significant level of funding from our direct Economic Recovery Loan Program to businesses facing adversity without access to the usual lending sources to meet their needs. These needs were evident in all counties of the state.
|
|
|
|
| Ask FAME | |
Q. I have been facing road blocks on my path to bringing my new business idea/product to fruition. I am fully committed to my venture, believe that the business can become successful, and have invested all personal funds possible. I have been unable to obtain loans from banks or any other source I can think of, however. Where can I look to obtain some financial help?
A. In addition to providing Maine businesses with loan insurance and loan products, FAME also has an interest in encouraging equity and near-equity investments in Maine businesses. FAME is able to do this through incentives for private investors as well as through private venture capital funds. The Maine Seed Capital Tax Credit Program is a means to authorize Maine income tax credits to investors for up to 60 percent of the cash equity they provide to eligible Maine businesses. These investments may be used for fixed assets, research or working capital.
Note: Please read the "Featured Program" section of this update for historical activity and more information on the program.
|
|
FAME Business Activity and Portfolios | |
1. FAME Commercial Loan Insurance Activity (Loans Closed) FYE 2010:
Note: FAME's goal is to achieve statewide loan insurance coverage; however, because the activity in FAME's Commercial Loan Insurance Program is driven by applications from commercial lenders, the results may reflect higher levels of activity in areas with higher population bases (and the associated higher concentration of businesses).
2. FAME Commercial Loan Insurance Activity (Loans Closed) 2010 - Q4:
A. Commercial Loan Insurance Activity Q4 - by Lender (as of 6/30/2010):
B. FAME Commercial Loan Insurance Activity Q4 - by County:
Note: FAME's goal is to achieve a statewide loan insurance coverage; however, because the activity in FAME's Commercial Loan Insurance Programs is driven by applications from commercial lenders, the results may reflect higher levels of activity in areas with higher population bases (and the associated higher concentration of businesses).
3. FAME Direct Loan Activity (Loans Closed) FYE 2010:
4. FAME Direct Loan Activity (Loans Closed) 2010 - Q4:
5. Jobs Created and/or Retained in FYE 2010 with FAME programs:
A. Economic Recovery Loan Program - 655
B. Commercial Loan Insurance Program - 2,247
6. FAME Industry Concentration:
A. Commercial Loan Insurance Program - By Lender
The following table details dollar exposure by Lender:
|
Bank |
Exposure | |
Machias Savings Bank |
$ 9,739,549.00 | |
Camden National Bank |
$ 5,178,798.00 | |
Bangor Savings Bank |
$ 5,047,345.00 | |
Bar Harbor Banking & Trust |
$ 4,767,673.00 | |
TD Banknorth |
$ 4,353,855.00 | |
Farm Credit of Maine |
$ 4,291,512.00 | |
Norway Savings Bank |
$ 4,176,539.00 | |
Skowhegan Savings Bank |
$ 3,871,385.00 | |
Kennebunk Savings Bank |
$ 3,439,952.00 | |
Maine Bank & Trust |
$ 3,211,319.00 | |
Gorham Savings Bank |
$ 2,184,703.00 | |
KeyBank National Association |
$ 1,592,634.00 | |
Evergreen Credit Union |
$ 1,510,462.00 | |
Androscoggin Bank |
$ 1,437,128.00 | |
Northeast Bank |
$ 1,368,539.00 | |
All others < $1MM |
$ 5,046,798.00 | |
$ 61,218,191.00 |
B. Commercial Loan Insurance Program - by Industry
The following table provides details on FAME Exposure by Industry:
|
Other |
$ 50,000.00 | |
Wholesale trade |
$ 177,688.00 | |
Communication |
$ 205,641.00 | |
Entertainment |
$ 659,845.00 | |
Financial/insurance |
$ 729,759.00 | |
Transportation |
$ 1,702,044.00 | |
Construction |
$ 5,745,317.00 | |
Agriculture |
$ 7,618,560.00 | |
Retail |
$ 13,197,206.00 | |
Services |
$ 14,061,619.00 | |
Manufacturing |
$ 17,070,512.00 |
|
| Featured Program | |
Maine Seed Capital Tax Credit Program
This program is designed to encourage equity and near-equity investments in eligible Maine businesses, directly and through private venture capital funds. FAME may authorize state income tax credits to investors for up to 60% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
Private Investors: Essentially, the business must be located in Maine, the private investor must not own more than 50% of the subject business, and the business must either: (1) be a manufacturer; (2) provide goods or services with 60% of sales derived from outside the state or to out-of-state residents; (3) develop or apply advanced technologies; or (4) bring significant permanent capital into the state. The tax credits to the private investor are up to 60% (dependent upon whether the the business is located in a high unemployment area). The private investor may provide up to $500,000 per business, and the investment must be at risk for five years
Venture Capital Fund Investors: For a business receiving investment from an established venture capital fund (VCF), the VCF may provide up to $1million per venture capital fund in any consecutive three year period. Investors in any one venture capital fund cannot receive more than $5 million in credits, but may invest more without credit. Investors in certain qualifying venture capital funds may receive one-half of this credit (up to 20%) at the time of investment. The remaining amount of an investor's tax credit will be awarded when and if the venture capital fund invests sufficient monies in an eligible Maine business. Credits will be revoked if not substantiated within three years. Investment into venture capital funds must be at risk and principal may not be paid without FAME consent for five years. Dividends, royalties, interest, stock options or warrants and other forms of return, which are not in the nature of return of principal, are allowed.
As the following chart illustrates, the Maine Seed Capital Tax Credit Program has been very successful in the provision of equity/near-equity investment in Maine. Since 1989, the program has encouraged over $56 million in investments:
Information and applications for this program can be obtained at the FAME Web site or you can contact FAME directly at 207-623-3263 or 1-800-228-3734.
|
| Legislative Update | |
The Second Regular Session of the 124th Maine Legislature adjourned Monday, April 12, 2010. Among the bills of interest to the business community were:
L.D. 1666 - An Act to Improve the Seed Capital Investment Tax Credit Program: This bill won unanimous support in the Taxation Committee last session but died on the floor due to its fiscal note. The bill, sponsored by Senate President Libby Mitchell, would have increased the current credit administered by FAME to 60% statewide and allowed it to be refundable to encourage out-of-state investors to invest in Maine businesses.
LD 1530 - An Act to Facilitate Recovery Zone Facility Bonds, Recovery Zone Economic Development Bonds and Qualified Energy Conservation Bonds: Enacted into law, this measure facilitates the issuance of recovery zone facility and other bonds authorized by the federal American Recovery and Reinvestment Act of 2009. The bonds provide any business in the state making capital expenditures with access to tax-exempt bond financing. The law creates a mechanism to allow for a reallocation process that waives each county's allocation to FAME and the Maine Municipal Bond Bank to enable the reallocation of the unused volume cap across the state in a timely manner. Along with Maine counties, FAME and the Maine Municipal Bond Bank will help facilitate these low-cost opportunities for financing economic development.
LD 1 - An Act to Stimulate Capital Investment for Innovative Businesses in Maine: Also known as "Fund of Funds," this modified bill became law and encourages the use of assets of the Maine Public Employees Retirement System (MePERS) for economic development in the state. The new law establishes an innovation finance program authorizing FAME to guarantee up to 80% of certain investments by the retirement system. FAME may issue refundable "tax credits" (really refunds since MePERS is a non-taxable entity) to guarantee up to 80% of any investments made by the retirement system in venture capital funds whose strategies include meeting certain criteria for strong connections to the Maine economy. Reimbursement under the program will be limited to $20 million total, and no more than $4 million of tax credits could be placed at risk within any single venture capital fund.
In other news, in June, Maine voters approved an economic development bond that will recapitalize FAME's Economic Recovery Loan Program by $3 million and will provide $1 million for food processing grants to be administered by FAME. Also, the Small Enterprise Growth Fund (SEGF) will be recapitalized by $4 million.
Maine's new fiscal year began July 1 with a possible $100 million shortfall looming, and, in response, Governor Baldacci ordered another state government hiring freeze. The order places a hiring freeze on vacant positions and limits overtime, travel and other expenses. The order allows for emergency exceptions, however.
The finance commissioner's office recently informed state agencies that they have to cut $100 million from their budgets for the current budget cycle because Congress has not extended Medicaid reimbursement payments by six months to the states. The largest cuts will come from the Department of Education, which must make plans to trim $39.7 million, and the Department of Health and Human Services, which must plan on a cut of $29 million. FAME's target cut is $545,411.
State agencies must submit final budget cut plans by September 1, and the Governor's office will issue a curtailment order by October 1 if Congress does not extend reimbursement payments.
Also, Governor Baldacci will call the Maine Senate into session for the purpose of voting upon various appointments on Wednesday, August 25.
Finally, Secretary of State Matthew Dunlap held a public drawing recently to determine the order of the bond questions that will appear on the November 2, 2010 General Election ballot.
On the November ballot there will be one citizen initiative question and two bond questions. There are no people's veto questions, no Constitutional resolutions and no legislative referenda. Since there is only one citizen initiative question, that question will be first on the ballot.
In their correct order, the questions that will appear on the November 2, 2010, General Election ballot are:
Question 1 (Citizen Initiative): Do you want to allow a casino with table games and slot machines at a single site in Oxford County, subject to local approval, with part of the profits going to specific state, local and tribal programs?
Question 2 (Bond Issue): Do you favor a $5 million bond issue to be awarded on a competitive basis to increase access to dental care in Maine, $3.5 million to be used for a community-based teaching dental clinic affiliated with or operated by a college of dental medicine to be matched by $3.5 million in other funds, and $1.5 million to be used to create or upgrade community-based health and dental care clinics across the State to increase their capacity as teaching and dental clinics?
Question 3 (Bond Issue): Do you favor a $9.75 million bond issue to invest in land conservation and working waterfront preservation and to preserve parks to be matched by $9.25 million in federal and other funds?
Please let us know if you have any comments or suggestions, and visit our Web site at: www.famemaine.com.
|
|
|
Business and Education at Work for Maine
|
|
Finance Authority of Maine
5 Community Drive
P.O. Box 949
Augusta, Maine 04332-0949
Tel: (207) 623-3263
(800) 228-3734
Fax: (207) 623-0095
TTY: (207) 626-2717 |
|
|
|
|
