Business Resources & Incentives > Incentives > California Incentives

California Incentives

California Business Portal

Sponsored by the California Economic Development Partnership, this website provides a portal to a number of resources for starting, growing, financing, expanding or relocating a business in California. The portal seeks to simplify the path to the resources you need. These resources are provided by a myriad of public and private sources, from State and federal agencies to local private non-profit organizations, all of which are accessible to you here, simply by clicking through the portal's pages.

 

Relocating or Expanding a Business

Site Selection and Relocation Assistance Find out how to go about locating or expanding your business in California. Learn how California Business Investment Services (CalBIS) can help you identify and evaluate how to do business and locate in California.

 

California Investment Guide This guide provides an overview of business advantages, taxes, and the permit process.

 

Local Area Profile Access an overview of labor market information in a particular area within the state, to help with selecting your location.

 

Enterprise Zone Tax Incentive Program The Enterprise Zone Program targets economically distressed areas throughout California. Special state and local incentives encourage business investment and promote the creation of new jobs in these zones.

 

Empowerment Zones and Renewal Communities This site provides information on the federal Renewal Communities and urban Empowerment Zones incentives.

 

New Markets Tax Credits The New Markets Tax Credit Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities.

 

California Community College Initiatives

Advanced Transportation Technology (ATT)
The ATT Initiative was established to transform the workforce in the rapidly developing, technology-driven transportation industry by providing training in the areas of alternative fuels, alternative fueled vehicles, intelligent transportation systems, wireless communication and many other newly emerging technologies.

Applied Competitive Technologies
The objective of the Applied Competitive Technologies Initiative is to improve the competitiveness of small and medium-sized manufacturing and engineering companies; by fortifying sound manufacturing technologies and by supporting the development of a skilled workforce.

Biotechnology
The Biotechnology Initiative serves the workforce needs of the biotechnology community, addressing the life-long learning needs of the workforce for the biotechnology industry in California.

Business & Workforce Performance Improvement
Business & Workforce Performance Improvement is the delivery system used by colleges to customize training, assessment, and consulting services to employers.

Environmental Technology
The Environmental Technology Initiative trains the workforce in the Environmental, Health and Safety, (EH&S), industry, conduct EH&S audits for small and medium-sized businesses, and support the training and education needs of EH&S curricula in our California community colleges.

Health Care
The Health Care Initiative promotes the advancement of California's health and economic growth through quality education and services focusing on workforce development and continuous workforce improvement in health care delivery.

International Trade Development
The mission of the Centers for International Trade Development Initiative is to advance California's economic development and global competitiveness by providing quality training and services to small to medium sized enterprises that are potential or current exporters or importers.

Multimedia & Entertainment
The Multimedia & Entertainment Initiative is committed to creating environments in which students can achieve artistic excellence and develop technological expertise for careers in the communications, entertainment and interactive learning industries.

Small Business Development
The Small Business Development Center Initiative mission is to assist prospective and existing small business owners in California to start, retain, or expand their businesses.

Workplace Development
The Workplace Learning Resource Initiative provides the public and private sectors with a variety of customized workplace learning services including occupational-specific skills assessment, needs and task analysis of requirements of the job, basic skills instruction, English as a second language (esl), and customer service training.

Emerging Technologies - Geographic Information Systems Technology
Geographic Information Systems Technology (GIS) is computer software that links geographic information (where things are) with descriptive information (what things are). Access information on Community Colleges with GIS offerings.

Investment Assistance

Research and Development Tax Credit 

Designed to encourage businesses to increase their basic research and development activities in California, the research and development tax credit allows companies to receive a 15 percent credit against their bank and corporation tax liability for qualified in-house research expenses, and a 24 percent credit for basic research payments to outside organizations. Qualified research expenses generally include wages, supplies and contract research costs. To qualify, a taxpayer's research must be conducted within California and include basic or applied research of scientific inquiry, original investigation for the advancement of scientific or engineering knowledge or improved function of a business component. http://www.ftb.ca.gov/forms/misc/1082.pdf 

Net Operating Loss Carryover 

California tax law allows businesses that experience a loss for the year to carry this loss forward to the next year in order to offset income in the following years. New businesses can carry over 100 percent of their losses for 10 years if the loss is in their first year of operation. http://www.ftb.ca.gov/forms/05_forms/05_3805qins.pdf 

Empowerment Zones 

The federal government has designated sections of several California communities as Renewal Communities, Empowerment Zones and Enterprise Communities (RC, EZs and ECs). The cities of Fresno, Los Angeles, Santa Ana, San Diego, San Francisco, Orange Cove, Parlier, and the counties of Imperial and Riverside have designated RCs, EZs or ECs. Benefits to businesses locating or expanding in these areas include: Employer wage credits of 20 percent for the first $15,000 in wages paid to an individual who resides in the EZ up to $3,000; Section 179 deduction allowing businesses to deduct all or part of the cost of eligible property (machinery, furniture, equipment, computers) up to an additional $20,000; • Availability of low interest rate taxexempt private activity bonds to finance industrial projects typically between $1- $3 million (some zones have substantially larger limits), often with fewer restrictions than those normally associated with tax-exempt bond financing; • Possible city business tax exemptions; • Postponement of capital gains on the sale of EZ/EC assets. http://www.hud.gov/offices/cpd/economicdevelopment/programs/rc/index.cfm

 California Investment Guide Page 9

 Foreign Trade Zones California's foreign trade zones (FTZ) are located in San Francisco, San Jose, Long Beach, Oakland, West Sacramento, San Diego, Palmdale, Los Angeles, Port Hueneme, Merced/Madera/Fresno counties, Stockton, Palm Springs, Santa Maria, Victorville, Eureka and Imperial, Butte and Riverside CountiesFTZs are secured areas legally outside of U.S. customs territory usually located in or near customs points of entry. Foreign trade zones allow entry of foreign or domestic merchandise without formal customs entry or government excise taxes. Merchandise entering a zone may be stored, tested, sampled, relabeled, repackaged, displayed, repaired, manipulated, mixed, cleaned, assembled, manufactured, salvaged, destroyed or processed. Products exported from or imported into foreign trade zones are excluded from customs duty and excise taxes until the time of transfer from the foreign trade zone. http://www.ia.ita.doc.gov/ftzpage

New Markets Tax Credits 

The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against federal income taxes for qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39% of the cost of the investment and is claimed over a seven-year period. In each of the first three years, the investor receives a credit equal to 5 percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is 6 percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period. NMTCs will be allocated annually by the Fund to CDEs under a competitive application process. As of 2007, allocates in California include Border Communities Capital Company, LLC of Solana Beach; Clearinghouse CDFI of Lake Forest; Impact Community Capital CDE, LLC of San Francisco; KHC New Markets CDE, LLC Series A of Carlsbad; Lenders for Community Development of San Jose; and WNC National Community Development Advisors, LLC of Costa Mesa. http://www.cdfifund.gov/index.asp  

 

Targeted Tax Incentives


Partial Sales or Use Tax Exemption
California also provides "new" or start up companies the option of a 5 percent partial sales or use tax exemption on all qualifying manufacturing property purchased or leased generally during the company's first three years of operation. The partial sales tax exemption is available as an option to the MIC on an item-by-item basis.

In-Lieu Sales or Use Tax Refund

The company might prefer to claim an in-lieu sales or use tax refund equal to the MIC claim available for the current year. Under this program, the company can elect to file a claim for refund equal to the amount of the MIC that the company could have used to offset current year franchise or income tax liability (and can be claimed no sooner that the MIC could have been claimed).

Research and Development Tax Credit

Designed to encourage companies to increase their basic research and development activities in California, the research tax credit allows companies to receive a credit of 11 percent for qualifying research expenses (research done in-house) and 24 percent for basic research payments (payments to an outside company), making it the highest in the nation. To qualify, research must be conducted within California and must not include research for the purpose of improving a commercial product for style, taste, cosmetic, or seasonal design factors.

Net Operating Loss Carryover

California tax law allows businesses that experience a loss for the year to carry this loss forward to the next year in order to offset income in the following year. New businesses can carryover 100 percent of their losses over eight years if the loss is in their first year of operation, 100 percent over seven years if in their second year of operation and 100 percent over six years if in their third year of operation. Existing California businesses can carryover 50 percent of their losses for five years.

Child Care Tax Credit

Employers who pay or incur costs for the start up of a child care program or construction of an on-site child care facility are eligible for a credit against state income taxes equal to 30 percent of its costs, up to a maximum of $50,000 in one year. Excess credits may be carried over to succeeding years.


Financing Assistance
Pollution Control Financing
The entire cost of a pollution control project, including land and buildings attributable to the project, equipment, engineering fees and related financial and administrative expenses, can be funded by the program. For more information on pollution control financing call the California Financing Authorities at (916) 654-5610.

Small Business Loan Guarantee

The Small Business Administration's loan guarantee program promotes job retention and creation and encourages small business entrepreneurship particularly among minority, women, and disabled persons. A "small business" is a manufacturer of 500 employees or less, or a retailer with gross international sales ranging from $3.5 million to $14.5 million depending on the industry. The State of California's Small Business Loan Program differentiates itself from the U.S. Small Business Administration's programs by providing a niche in guarantee financing on revolving lines of credit, small loans and agricultural loans. Call the Office of Small Business at (916) 322-5790.

SBA 504 Loans

SBA (Small Business Administration) 504 loans are marketed, processed, closed, and serviced by Certified Development Corporations (CDC) throughout California. Through the SBA 504 Program, CDC's provide 90 percent real estate financing with a special emphasis on rural areas and distressed urban areas. The second mortgage, long-term, fixed-rate financing nature of the program allows banks to participate in the business's expansion by reducing their risk on real estate exposure. The benefit to the businessperson is the lower down payment requirement (10 percent) and the longer-term, fixed-rate second mortgage which translate into reduced monthly payments. Call the California Statewide Certified Development Corporation at (800) 348-6258.

California Capital Access Program

The California Capital Access Program (CalCAP) encourages banks to make loans to California small businesses. The State Treasurer's Office, through the California Pollution Control Financing Authority (CPCFA), has committed to provide "loan loss" guaranty accounts to participating banks willing to make loans to banks with higher than conventional risk. Call the California Financing Authorities at (916) 654-5610.

Sudden and Severe Economic Dislocation Loan Program

The Sudden and Severe Economic Dislocation Loan Program (SSED) provides business loans and, therefore, job creation in areas of the state affected by plant and military base closures, defense downsizing, industry layoffs and presidentially-declared disasters. Reemployment and retention of jobs in defense-related communities is a top financing priority. Below market rate loans of up to $500,000 are available for land, buildings (no construction), machinery and equipment, and working capital for projects which would not normally qualify for conventional financing. The program is designed to be used in conjunction with private lending and investment sources. Call the Office of Business Development - Rural Assistance Unit at (916) 322-8311.

California Export Finance Loan Guarantees

The California Export Finance Office (CEFO) helps small and medium-sized California companies finance their export sales by providing working capital loan guarantees to financial institutions. CEFO guarantees cover up to 90 percent of an export loan, allowing for a maximum guarantee of $750,000 and a loan of $833,000. Through co-guarantee agreements with both the U.S. Small Business Administration (SBA) and The Export Import Bank of the United States, CEFO can double its guarantee capacity to provide the exporter with a guaranteed loan of up to $1.6 million. CEFO has the authority to administer their loans, guarantees, and insurance products for California companies. Call the Export Finance Office at (562) 499-6014.

Underground Storage Tank Loans

Loan proceeds must be used to repair, replace (includes acquisition and installation) or upgrade underground petroleum tanks only, with an allowance for ancillary equipment required by current regulations. The maximum loan amount is $750,000. Loans can be given for up to 100 percent of the total project cost.

Hazardous Waste Reduction Loans

These loans assist small businesses to reduce waste generation or to reduce the hazardous properties of waste generated. Proceeds can only be used to finance hazardous waste equipment acquisition, installation, and processes. The California Department of Toxic Substance Control, Pollution Prevention, and Technology Development Division must determine that the equipment or processes to be financed qualifies for this program. Direct loans for up to 100 percent of the project's costs with a maximum loan amount of $150,000 are available. The maximum term of the loan is seven years. Call the Office of Small Business at (916) 322-5790.


Other Incentives
Golden State Capital Network
The Golden State Capital Network (GSCN) addresses the critical funding needs of entrepreneurial ventures, which typically do not meet the investment criteria of most established large institutional funding sources. GSCN matches growing companies in need of funding with appropriate investors in search of opportunities with a focus on Northern California and under-served rural areas of the state. GSCN does not become involved in the discussion or negotiation process between the parties, differentiating itself from financial intermediaries or investment brokers. Call the GSCN at (530) 893-8732.

Health Insurance Plan of California

The Health Insurance Plan of California (HIPC) is a state-sponsored insurance pool that offers affordable access to nearly two-dozen different insurers and 28 different health care options for companies with three to 50 employees. Once enrolled, the employer can remain with HIPC up until they grow to over 100 employees. HIPC is able to offer discounted rates by pooling the premiums of participating companies. To date, over 8,000 companies and 110,000 employees are part of the program. Call HIPC at (800) 447-2937.

 

Major Funding Programs

Infrastructure and Economic Development Bank (IBank)

The California Infrastructure and Economic Development Bank (I-Bank) significantly contributes toward California's economic growth by helping local governments and businesses secure the capital they need in order to invest in major public, private, and nonprofit ventures.

 

California Loan Guarantee Program

This program allows a business to not only obtain a loan it could not otherwise obtain, but to establish a favorable credit history with a lender. With that, the business may obtain further loans on its own, without the assistance of the program.


Infrastructure State Revolving Fund Program

The Infrastructure State Revolving Fund (ISRF) Program provides low-cost financing to public agencies for a wide variety of infrastructure projects. ISRF Program funding is available in amounts ranging from $250,000 to $10,000,000, with terms of up to 30 years. Interest rates are set on a monthly basis.

501(c)(3) Revenue Bonds

501(c)(3) revenue bond financing is available to eligible nonprofit corporations for acquisition and/or improvement of facilities and capital assets. However, nonprofit organizations are not subject to the same restrictions on the use of bond proceeds as industrial development bonds. The I-Bank has provided $962 million in bond financing to nonprofit agencies since 1995, funding a variety of projects ranging from the Asian Museum of San Francisco, to the Scripps Research Institute in La Jolla, to the American Center for Wine, Food and the Arts in Napa.



Technology & Innovation Partnerships

California Alternative Energy & Advanced Transportation Authority (CAEATFA)

Sales & Use Tax Exemptions for Zero Emission Vehicle (ZEV) Manufacturing

Under CAEATFA's authorizing statute, the authority’s purpose is to provide industry in California with alternative methods of financing alternative energy and advanced transportation technologies. The statute defines advanced transportation as: "emerging commercially competitive transportation-related technologies identified by the authority as capable of creating long-term, high value-added jobs for Californians while enhancing the state's commitment to energy conservation, pollution reduction, and transportation efficiency." (California Public Resources Code Section 26002.3(d)). 

The CAEATFA Board has directed authority staff to explore proposals for providing sales and use tax exemptions for the purchase of ZEV manufacturing equipment. The goal of this new ZEV program is to create a strong new ZEV industry within California that reduces green house gas emissions and creates new long-term high value-added jobs. This exemption is created through a sales lease- back approach where: CAEATFA purchases specified equipment (tangible personal property, not real property) on behalf of company X. CAEATFA finances this purchase through a bond or loan. Company X then leases the equipment from CAEATFA, with the lease payments paying for the bond or loan. As envisioned, the lease would stay in existence only from the time of the equipment purchase until the equipment is placed in use. By statute, CAEATFA does not have to pay sales tax on the equipment it purchases. The Board of Equalization (“BOE”) oversees state sales and use tax issues and would be consulted in the process. http://www.treasurer.ca.gov/caeatfa/


Corporation for Manufacturing Excellence (MANEX) 48001 Fremont Boulevard, Fremont, CA 94538 Phone: 510.249.1480 e-Mail: info@manex.org


California Space Authority (CSA) Address: 2225 Skyway Drive, Santa Maria, CA 93455 Phone: 805.349.2633 e-Mail: csa@californiaspaceauthority.org


California Council on Science and Technology (CCST) Address: CCST Sacramento Office,1130 K Street, Suite 280, Sacramento, CA 95814 Phone: 916.492.0996 e-Mail: aloufas@ccst.us



Business & Community Resources : Community & Investment Incentives
Do you have a business in a tax incentive zone? If you do, then you have come to the right place. The Technology, Trade and Commerce Agency has tax incentive programs that help businesses throughout California.

Local Agency Military Base Recovery Act (LAMBRA)
Businesses located on closed military bases may be eligible for tax credits. Learn more about military bases that are in the Local Agency Military Base Recovery Act (LAMBRA) program.


Enterprise Zones

There are Enterprise Zones in three cities in the East Bay: Oakland, Pittsburg, Richmond. Find out more about the Enterprise Zone benefits here.


Business Tools

Small Business Resources and Small Business Development Centers - Alameda County SBDC - Contra Costa SBDC

Small businesses are an important part of California's economy. They generate jobs, provide economic opportunity and flexibility, and boost economic output. California is home to more than 2.6 million small businesses, including the self-employed. We have a number of resources that can help you grow and prosper.


Permitting Information
and Permitting Handbook
The CalGOLD database provides detailed information on the business permit, license and registration requirements from all levels of government. The information includes a description of the requirement, the name, address, and telephone number of the agency, and frequently even a direct link to that agency's Internet web pages. The information identified is specific to the type of business and its location in California.

Employment Training Panel
Today's high-tech and global economy requires California workers to be equipped with the most advanced skills. The Employment Training Panel offers effective job training that is more essential today than ever before.

How you can save money on energy costs
Find out how other businesses saved big bucks with their innovative energy-saving ideas.