Starting a small business requires funding. While many businesses make use of small business loans to launch their company and get started, it is not the only option available for funding and management. The state and federal government often offer incentives to businesses that are willing to relocate the company to the empowerment zones.
Understanding Empowerment Zones
Before it is possible to determine if this measure is appropriate for the company, businesses first need to understand empowerment zones and how they can help launch the company.
An empowerment zone is any area of the city that is considered distressed when compared to other areas around it. Businesses that are willing to move to these distressed area instead of working in the most popular locations are offered a wide range of incentives to help get the company up and running.
Incentives that companies might obtain while using the city’s empowerment zones include tax credits that can reduce the cost of taxes, grants from the city or state government and bonding authority. Other benefits are sometimes available, depending on the particular city and location.
Using Empowerment Zones to Start a Business
Empowerment zones are not only available to existing small businesses that are willing to move, they are also available for startup companies. Unlike an existing business, startup companies are considered a higher risk and might not be eligible for traditional loans. By using the empowerment zones in the city, it is possible to start the company through grants.
Obtaining the grants as a startup company that plans to work in an empowerment zone requires creating a sound business plan. The business owner will need to establish who is involved in the company, their previous work experience, how the company plans to work around the challenges of the distressed location, and a plan showing when the business expects to start seeing profits.
Small businesses can make use of the city’s empowerment zones by establishing the new company within these regions and applying for the benefits. In most cases, startup companies will need to show a strong business plan before they are offered grants. The end result is funding, lower taxes and helping the economy of areas in the city that are currently distressed.