Revenue Bonds & Other Financial Sources

Legislation is in place to permit up to $2 million of an Act 9 issue to be guaranteed under a state insurance guaranty program.

Other bond-based financing available in Arkansas includes tax-exempt general obligation bonds issued by individual cities and counties, special obligation revenue bonds issued by cities and counties to finance pollution-control facilities and both taxable and tax-exempt revenue bonds issued by the Arkansas Development Finance Authority (ADFA) from which small firms can benefit through a �pooling� program.

ADFA was designed to assist companies throughout the state to finance the construction of buildings and the purchase of land and equipment. The intent of the Bond Guaranty Program according to the ADFA Bond Guaranty Law (ACT 505 of 1985) is as follows.

Bonds are voted by the Brinkley City Council and/or Monroe County Quorum Court and are sold in regular investment markets. These bonds can be used to purchase land, construct buildings, purchase equipment, provide architectural and engineering services, and for any other use normally involved in the construction of a new facility. The bonds cannot be used for working capital. New and expanding firms may also find financing assistance through the various federal funding programs.

  1. To restore and revitalize existing industrial enterprises and agricultural business for the purpose of retaining existing employment within the state.
  2. To promote and develop the expansion of existing and to establish new industrial enterprises and agricultural business for the purpose of further alleviating unemployment within the state and providing additional employment.
  3. To promote and target resources of the state to further the development of export trade of Arkansas products for the purpose of economic development in the state and providing additional employment.

Other areas do not directly affect business development.

Because IDB�s are exempt from state and federal income taxes, loans made through the sale of bonds can provide substantial savings to businesses taking advantage of the program. The interest rates on these loans are typically up to 30% below conventional loan interest rates and for terms of up to 20 years. While IDB�s facilitate low interest rate loans, there are other benefits as well. IDB�s broaden the source of capital in the state and are used as a tool in the economic development efforts.

Program applicants are requested initially to arrange a discovery interview with ADFA where preliminary data, project description, explanation of financing request and current financial statements on borrowing entities will be reviewed for the Guaranty Program consideration.

Important areas of consideration in the approval process require that applicants demonstrate reasonable assurance of debt repayment from operations agree to comply with all rules and regulations of the Authority throughout the guaranty term, and demonstrate and document that increased employment opportunities will evolve from the project.

The program guarantee limits extend generally from a minimum of $100,000 to a maximum of $4,000,000 with bond borrowings ranging from 80% of the appraised market value as relates to existing facilities, 80% of cost or appraised value on equipment and 80% of project costs or appraised market value on new construction.

Appropriate ADFA fee costs are (a) Guaranty Fee -- one time up to 4 1/2% of guaranty amount (b) Issuance Fee -- one time 1/2% of bond issue amount and (c) Annual Servicing fFee -- 1/8% of bond issue amount chargeable annually. Additional financing options include various programs offered by the Arkansas Capital Corporation (ACC), a nonprofit institution that helps companies with loans, shared risks and other financial assistance, and by the Arkansas Capital Development Corporation (ACDC), a for-profit institution combining state and private funds for higher-risk financing.

The Arkansas Science and Technology Authority (ASTA) administers a $1.8 million investment fund that provides new and developing technology-based companies with seed capital through loans, royalty agreements and limited stock purchases.

The Enterprise Corporation of the Delta (ECD) can provide financing for development and technical assistance. Organized in 1994 as a private, not-for-profit business development organization, its purpose is to improve the quality of life for low and moderate income residents of the delta regions of Arkansas, Mississippi and Louisiana. It can provide market-driven financial and technical assistance to delta firms and entrepreneurs. ECD can finance term loans, lines of credit, venture capital and other products to fill critical financial gaps. It will also participate with other lenders and can package and identify financing sources for business. Using technical assistance expertise, ECD will provide diagnosis of non-finance business problems (management, marketing, legal, production, etc.) and structure solutions. It will also provide resource identification, brokering and referrals, as well as entrepreneurial training.

Information on the following programs can be obtained by contacting the Arkansas Department of Economic Development at 501-682-1121.

  • Industrial Revenue Bonds
  • Tax-Free Revenue Bonds
  • Taxable Revenue Bonds
  • General Obligation Bonds
  • Pollution Control Bonds
  • Enterprise Zone Programs
  • Arkansas Quality Management Task Force
  • The Matchmaker Program
  • Cross-Match Program
  • Scrap Match Program
  • Industrial Energy Conservation Program
  • Industrial Waste Minimization Program
  • Arkansas Day Care Facility Tax Incentive Program
  • Other Specialized Incentives Arkansas Investment
  • Sales and Use Tax Credit for Manufacturers