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The following list of questions emerged from the first round of applications in 2007. We anticipate additional questions once the 2008 round is announced so please check this section for future updates. If you have additional questions, please send an email to info@networkkansas.com with the subject line E-Community.
Question: What is the maximum amount of tax credits that each community can apply for? Answer: Communities applying for to become an E-Community can apply for $100,000 in tax credits. This translates to $127,300 in net funds raised for each E-Community. Current E-Communities can apply for additional tax credits once they have met specific performance criteria.
Question: What can the funds be used for? Answer: The purpose of the Entrepreneurship Tax Credit fund is to provide matching, unsecured loans and grants to entrepreneurs and small businesses in rural and distressed areas of Kansas. The funds should be used primarily for matching loans and grants that leverage capital from financial institutions, NetWork Kansas partners who provide funding to startup and existing businesses, and other capital providers. An example of this is the StartUp Kansas fund currently admistered by Network Kansas. StartUp Kansas was launched in August 2006 to provide funding to small businesses in rural and distressed Kansas communities in the form of matching grants or unsecured loans that match the terms of the financing provided by a NetWork Kansas partner working on behalf of the entrepreneur. Since its inception, StartUp Kansas has awarded more than $800,000 in loans to more than 30 small businesses throughout rural areas of Kansas. This has enabled the businesses to leverage more than $6 million in additional capital. This example illustrates a way to utlize E-Community funds to provide leverage for access to additional capital.
Question: Are there restrictions to the funds? Answer: The funds must be utilized to provide seed capital to entrepreneurs and small businesses. This is defined as loans and grants. The funds cannot be used for buildings (such as business incubators), technical assistance, or projects that do not relate to a specific business venture.
The funds cannot be restricted to one type of business for a specific project. An E-Community must look for businesses that provide potential growth opportunities, enhance a community by meeting a specific community need, and/or provide a mix of economic and community benefits.
Question: If awarded, where do the funds go? Answer: The Kansas Center for Entrepreneurship will set up a separate savings account for each E-Community. Each E-Community will then submit information to the Kansas Center for Entrepreneuership about the businesses they have approved to receive loans and grants. The Kansas Center for Entrepreneurship will cut a check to the administrative support organization designated by each E-Community for disbursement to these businesses. All repayments will go back into the savings account for future loans and grants. All monies raised and recaptured remain with each designated E-Community.
Question: Who determines which businesses receive loans and grants? Answer: The E-Community Financial Review Board. The Kansas Center for Entrepreneurship will review each approved application to ensure that the use of funds meet statutory and transparency guidelines.
Question: How quickly must the E-Community raise funds? Answer: 2008 E-Community must receive 100% of their commitments by the due date of the application on August 15, 2008. Once approved as an E-Community, funds must be received by December 1, 2008.
Question: How quickly must the funds be disbursed? Answer: An E-Community does not have to make the loans in the next calendar year. There is no timeframe specified for disbursement to clients in your E-Community. Our philosophy is that funding decisions should be made based upon each business's prospects for success and its ability to enhance the community in terms of economic and/or community benefits. It is important that each community develop a process that is recognized by entrepreneurs and existing businesses as the most effective path to accessing capital and engaging the necessary resources to provide the best chance for success. If an E-Community does become dormant (i.e. there is no review activity or capital deployed for an extended period of time, such as 1-2 years) then it is possible that funds would be reallocated.
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