Financing Options and Resources

Central Administrative Office Tax Credit: State of North Carolina

If a corporation chooses to locate a central administrative office in Durham County, it is eligible to claim a seven percent (7%) tax credit on the new investment, not to exceed $500,000. Requirements include the creation of forty (40) new full-time administrative positions and continued operation of the facility during the following taxable year.  Investment is calculated from the cost of the property if owned; or, if the building is leased, the investment is equal to the cost of payments made over seven (7) years, plus any improvements made to the property.  This credit is taken by the taxpayer in equal installments over a period of eight (8) years.  This credit expires if the property ceases to be used as a central administrative office; the credit will also lapse if the number of employees at the central administrative office decreases by forty (40) jobs or more. The NC Employment Security Commission provides certification of central headquarters status for firms seeking this credit.

City Economic Development Investment Policy: City of Durham

The Capital Investment Incentive segment of the City's Economic Investment Policy provides a credit for up to three percent (3%) of the new, non-residential capital investment for projects located within the designated Community Development Area (CDA), or up to one and one-half percent (1.5%) of the project investment if the facility is located outside the CDA.  In no event will this incentive exceed $1 million.  The following criteria apply to all projects considered under this policy:

  • If the facility is located within the CDA and within Priority Growth Line (PGL), the project must directly create at least $500,000 in new, non-residential capital investment, or ten new (10) full-time jobs
  • If located outside the CDA, but within the PGL, the project must exceed a $20 million threshold in new, non-residential capital investment or create one hundred (100) full-time jobs
  • If located beyond both the CDA and the PGL, the project must directly create at least $25 million in new, non-residential capital investment or one hundred and fifty (150) full-time jobs
  • Eligible real estate includes office buildings, health care facilities, R&D facilities and labs, and warehouse/distribution buildings

In order to qualify, the project must be located within city limits and all proposed development must be consistent with Durham's economic and land-use goals.

Economic Development Investment Fund: Durham County

Corporations planning to develop or expand their site within Durham County may be eligible for a tax credit up to five percent (5%) of the total new or expansion capital investment, not to exceed $2 million.  Funding proposals are developed to help offset specific site preparation expenses, such as site grading, road improvements, and campus amenities.  Eligible industries for this investment are corporate headquarters, R&D operations, manufacturing facilities, and warehouse/distribution industries.  A minimum investment threshold of $15 million and forty (40) new, full-time jobs has been established.  Durham County is interested in creating quality jobs for its residents paying a competitive wage level.

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EC Rider Incentive Rate for Electricity: Duke Energy Company

Duke Energy offers a four-year billing credit incentive for new and expanding industry in Durham County.  This credit is applied to the participating firm's electric bill, and will reduce annual costs by twenty percent (20%) in the first year, fifteen percent (15%) in the second year, ten percent (10%) in the third year, and five percent (5%) in the fourth and final year.  In order to be eligible, the company must add a minimum of 1,000 kilowatts (kW) of new service at one delivery point, and must maintain a monthly average of 250 hours use of electricity demand.  Additionally, a capital business investment of $400,000 per 1,000 kW of load added plus a net increase in full-time employees, or an increase of at least seventy five (75) full-time employees per 1,000 kW of new load within the Duke Energy service area.  This incentive requires a minimum use contract commitment of ten (10) years.

Foreign Trade Zone: State of North Carolina

Under federal authorization, the North Carolina Department of Commerce has created six (6) Foreign Trade Zones (FTZs) across the state, providing a number of economic advantages for businesses involved in international trade.  Zone #93 is located in the Triangle, based at the Raleigh-Durham International Airport.  Companies desiring the ability to delay tariff costs until goods are ready for the consumer market may apply for a FTZ sub-zone assignment at their Durham County facility.  With this designation, raw goods may be imported, processed, assembled, re-packaged or otherwise manipulated on site with taxation occurring only once the product is ready for sale.

Industrial Revenue Bond (IRB) Financing: Durham County

IRBs are supervised and approved by the state, but are issued through the Durham County Bond Authority.  IRB funds may be used by a manufacturing corporation to finance land, buildings or equipment.  The company must agree to pay its employees at least 110% of the average state weekly wage for the appropriate manufacturing industry.  The bonds may only be used for the financing of manufacturing or industrial facilities and pollution control facilities for industry and/or related new equipment.  Two types of bonds are available for business development.  A Tax Exempt Bond does not subject the bond-holder's income to federal income tax; therefore the maximum bond amount is $10 million, and a firm may not hold more than $40 million outstanding nationwide.  Taxable Bonds differ in that they are not exempt from federal taxes, but do remain exempt from state taxes.  Because these bonds involve more risk for the borrower, there is no federal cap on the amount that may be borrowed.

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Investment Tax Credit: State of North Carolina

If a corporation investing in Durham County makes a significant investment in machinery or equipment, it is eligible for a seven percent (7%) tax credit on all investment dollars exceeding $1 million.  If investment takes place within the State Development Zone, this $1 million threshold is no longer applicable, and the firm may take a credit on the total amount of funds.  In order to qualify, the employees of the firm in question must be hired at a wage equal to 110% of the state's average weekly wage (100% of state average if the jobs are located within the SDZ).  All credits received must be taken in equal installments over the seven (7) years immediately following installment, and the equipment must remain in use within state and/or SDZ boundaries for those seven (7) years or credits will be forfeited.

Downtown Prime Rate Loan Program: Downtown Durham, Inc

This city program organizes local financial institutions, allowing them to provide low-interest business loans for the acquisition and rehabilitation of Downtown Durham properties, as well as purchase of capital equipment for downtown use.  There is a maximum origination fee levied of one-half percent (0.5%) and the minimum loan amount is set at $25,000.  Currently eight (8) local banking institutions participate in this valuable funding assistance program

Downtown Low Interest Loan Program: Downtown Durham, Inc.

Administered by Downtown Durham, Inc. under authority of the city, the Low Interest Loan Program offers applicants that qualify for the Prime Rate Loan program the opportunity to have the city purchase up to one-half the loan from the bank at two percent (2%) below prime, not to exceed $500,000.  A one-half percent (0.5%) origination fee will be charged, but the city will not involve themselves in further decisions made by the involved lenders.  The result of the combination of the Low Interest Loan program and the Prime Rate program (see previous) is a loan provided at one percent (1%) below prime to qualifying firms.

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Research & Development Tax Credit: State of North Carolina

Firms located in North Carolina are eligible for a tax credit of up to five percent (5%) of the state-apportioned share of the expenses for increasing research activities.  Eligible corporations must be registered for the federal income tax credit under Section 41(a) of the Internal Revenue Code, and the credit must be taken on the taxpayer's current yearly tax return.

Research Expansion Tax Credit: United States Government

Under Title 26, section 41 of U.S. Tax Code, select corporations are eligible for a research credit equal to twenty percent (20%) of the excess qualified research expenses for the taxable year, over the base period research expenses.  Base period research expenses are the average qualified research expenses for each year of the three (3) years preceding the taxable year in which the credit is being taken.  This credit is applicable to both in-house and contract research activities.  All research must be performed solely for the purpose of discovering information which is technological in nature; this research must also be intended for use in the development of a new or improved business component for industry, and all activities must be relegated toward a specific purpose.

SBA 504 Loan: United States Government

This program provides long-term, fixed-rate financing for a corporation's major assets, including land and buildings.  Working in conjunction with a local Community Development Corporation (CDC), the Small Business Administration (SBA) provides financing for small area businesses.  Most 504 projects involve a secured loan from a private-sector lender which covers up to fifty percent (50%) of the project cost, as well as a loan from the CDC which covers up to forty percent (40%) of the project cost, leaving a contribution of at least ten percent (10%) equity from the affected business.  The maximum loan amount allowed by SBA is $1,500,000 when meeting the job creation criteria or a community development goal; the maximum SBA loan is $2.0 million when meeting a public policy goal; the maximum loan for "Small Manufacturers" is $4.0 million.  (For further information click the link above for the United States Small Business Administration)  All proceeds from SBA 504 loans must be used for fixed asset projects.  Allocated funds may not be used for working capital, the consolidation of debt, or refinancing.  Eligible firms must be for-profit and fall within the SBA guidelines.  Loans will not be made to businesses engaged in rental real estate development or speculation.