Did you know that California is #1 in manufacturing output, business, and employment in the US? By setting a standard of excellence in the country, there are organizations and government agencies specifically designed to financially help manufacturing businesses in the state start, grow, and thrive.
Not sure where to start when looking for grants and funding opportunities for your manufacturing organization? We’ve got you covered with this guide to applications, programs, and tax incentives.
- Current State of Manufacturing Funding
- Funding Opportunities for California Manufacturers
- Additional Tax Credits & Exemptions for California Businesses
- CMTC’s CMA Program
Current State of Manufacturing Funding
The Manufacturers’ Outlook Survey for the third quarter of 2021 found 87.5% of respondents felt either somewhat or very positive about their company outlook; this, coupled with a 5.6% expected sales growth rate, indicates a promising rebound for the manufacturing industry that was disrupted by the pandemic.
In reviewing some of the available funding options for manufacturing organizations, there is a strong emphasis on how such organizations can impact the environment. Whether by grant opportunities or loan guarantees, many applications are focused on:
- providing financial assistance to transfer operations to more sustainable energy sources
- funding ecologically responsible projects and workforce development
- promoting the reduction of greenhouse gases
- and more
Overall, however, there is a variety of funding sources that address other important aspects of the manufacturing industry, such as business expansion or facility improvements.
Funding Opportunities for California Manufacturers
Capital Access Program
The California Capital Access Program for Small Business (CalCAP SB or Program), administered through the State Treasurer’s Office, encourages banks and other financial institutions to make loans to small businesses that have difficulty obtaining financing.
CalCAP also provides for special financing programs targeted toward:
- assisting small businesses and property owners finance the costs to seismically retrofit existing buildings and homes
- helping at-risk small businesses comply with requirements of the federal Americans with Disabilities Act
- enabling small fleet owners to purchase trucks that comply with California’s engine emission standards
- creating more charging stations for electric vehicles
Borrowers will need to contact a Participating Lending Institution to start the CalCAP loan enrollment process.
California Office of the Small Business Advocate
The California Office of the Small Business Advocate (CalOSBA) supports economic growth and innovation and ensures that all California small businesses and innovative startups have the information and direct support they need to better navigate resources, programs, and regulations.
CalOSBA serves as the voice of small businesses, representing their views and interests across the state and advocating for equitable access to markets, networks and capital. CalOSBA has helped more than 300,000 small businesses in California and features a network of financing opportunities across an array of industries, including manufacturers.
Sustainable Energy Entrepreneur Development Initiative (CalSEED)
The California Sustainable Energy Entrepreneur Development Initiative (CalSEED) is a $24m grant program created to help early-stage California clean energy manufacturers bring their concepts and prototypes to market. CalSEED is administered by CalCEF Ventures on behalf of the California Energy Commission (CEC).
Award levels range from $150-450k, and include access to corporate partners, investors, and industry experts, the opportunity to participate in workshops and networking events, plus brand promotion through select marketing channels. Previous awardees highlight efforts in:
- Energy efficiency
- Storage solutions
- Consumer adoption
- Power plant improvements
- Increased use or improved applications of smart inverters
- System and/or home modeling tools
- Heating/cooling energy efficiency
- Smart Grid components
- Generation (e.g., Solar, Bioenergy, Wind, and Geothermal)
Applicants don’t need to be affiliated with an organization to apply; individuals, small businesses and start-ups, and non-profit organizations can apply.
Additional Tax Credits & Exemptions for California Businesses
California Competes Tax Credit
The California Competes Tax Credit (CCTC) is an income tax credit available to businesses that want to locate in California or stay and grow in California. Businesses of any industry, size, or location compete for over $180 million available in tax credits by applying in one of the three application periods each year.
Applicants will be analyzed based on twelve different factors of evaluation, including the number of full-time jobs being created, amount of investment, and strategic importance to the state or region.
The purpose of the California Competes Tax Credit is to attract and retain high-value employers in California in industries with high economic multipliers and that provide their employees good wages and benefits.
Upcoming application windows for this tax credit application are:
- January 3, 2022 – January 24, 2022
- March 7, 2022 – March 28, 2022
Advanced Transportation and Manufacturing Sales and Use Tax Exclusion
The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) provides a full Sales and Use Tax Exclusion (STE) for advanced manufacturers and manufacturers of alternative source and advanced transportation products, components, or systems.
The program was expanded to include advanced manufacturing projects and projects using recycled feedstock. Such Qualified Property is eligible for STE:
- if its use is either to process Recycled feedstock or using Recycled feedstock in the production of another product or soil amendment, or
- that is used in an Advanced Manufacturing process, or
- that is used to manufacture Alternative Source products or Advanced Transportation Technologies
Eligible manufacturers planning to construct a new manufacturing facility or expand or upgrade a currently existing manufacturing facility may apply to CAEATFA for an STE award. If approved, the purchases of Qualified Property for the project are not subject to state and local sales and use tax.
Statute limits the Program to awarding $100 million in sales and use tax exclusions in each calendar year, and applicants are limited to $10 million of STE in a given calendar year. Applications are accepted on a rolling basis.
Sales and Use Tax Exemption for Manufacturing
This program, administered by the California Department of Tax and Fee Administration, provides a sales tax exemption of 3.9375% for basic manufacturing equipment. In addition, equipment for food processing, research and development, and biotechnology are also eligible for the exemption.
Tenant improvements for manufacturing or research and development may also be eligible. The partial exemption applies only to the state sales and use tax rate portion; the exemption does not apply to any local, city, county, or district taxes.
CMTC’s CMA Program
California Manufacturers Accelerator Plus® (CMA+) is a “co-investment” program designed for small and medium-sized manufacturers providing a fresh review of your business, bringing technical expertise and leadership to identify and solve problems.
Each year our advisors assist hundreds of manufacturers in identifying and implementing solutions to remove barriers to growth.
This program features benefits like:
- A CMA+ Advisor acting as a Business Advisor may work in concert with a Growth Coach, providing one-on-one coaching to help you achieve your business goals
- Helpful referrals to other business assistance resources
- Networking opportunities with local manufacturers as potential customers, suppliers, and strategic partners
- Information to leverage incentives and funding, when these special programs are available to offset costs for improvement or employee training
Contact CMTC today to get started!
About the Author
Gregg Profozich is a manufacturing, operations and technology executive who believes that manufacturing is the key creator of wealth in the economy and that a strong manufacturing sector is critical to our nation’s prosperity and security now, and for future generations. Across his 20-year plus career in manufacturing, operations and technology consulting, Mr. Profozich helped manufacturing companies from the Fortune 500 to the small, independents significantly improve their productivity and competitiveness.