Finance a Business
Business Incentives: Hiring
- Work Opportunity Tax Credit (WOTC) Extended
- The WOTC promotes the hiring of individuals who qualify as members of target groups, by providing a federal tax credit incentive of up to $9,600 for employers who hire them prior to December 31, 2019. Information for mailing certification requests may be found on the CA Employment Development Department website.
- Small Business Healthcare Tax Credit
- For tax years 2010 through 2013, the maximum credit is 35% for small business employers and 25% for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50% and 35%, respectively.
- City of Gilroy Jobs Offset Program
- Industrial businesses that generate new jobs may be eligible for a jobs offset incentive. In order to qualify, the business must create at least 25 permanent full-time jobs within two (2) years of the opening of the new business. A credit of up to $4,000 per job may be granted for each job that has any combination of annual salary and benefits of at least $45,000.
- The number of jobs created and the salary and benefit package minimums must be met for three consecutive years following the initial attainment of the guaranteed employment level. The credit must be applied against the development fees due for the project, and may not exceed the amount of the development fees due from the new business. If the salary and benefit package minimums are not met or are not maintained for three (3) consecutive years following the initial attainment of the guaranteed employment level, the business shall pay to the City the amount of the credit per job multiplied by the number of jobs by which the business falls short, plus interest at the highest yield rate in the City’s investment portfolio.
- Credits and Deductions for Businesses
Business Incentives: Utilities
- Rebates for Businesses are available from time to time through the SCV Water District. Please check their website for up to date business rebate information.
- Morgan Hill Utility Undergrounding Fee Deferral Program
- In general terms, the program enables new and expanding businesses to defer up to 80% of their utility undergrounding fees for a period not to exceed five years. Eligible property owners must pay a minimum of 20% of their utility undergrounding fees prior to obtaining building permits. The balance would be financed under the Program as a normally amortized loan requiring equal monthly payments over a term that would not be longer than 5 years. Interest, at the Local Agency Investment Fund (LAIF) rate plus ½% at the time the loan was initiated would be incorporated into the payments. Prepayment is permitted without penalty.
Business Incentives: Business Support Programs
- Foreign Trade Zone
- The U.S. Foreign Trade Zone Program is one of the nation’s earliest attempts to stimulate economic development and facilitate global trade and commerce. The U.S. Congress passed the Foreign Trade Zone Act in 1934. The Foreign Trade Zone program has enhanced global competitiveness for U.S.-based companies, particularly for firms engaged in manufacturing or production.
- The City of San Jose received the Foreign Trade Zone grant of authority from the federal government in 1974 – the 18th Foreign Trade Zone established in the U.S. The City of San Jose contracts with San Jose Distribution Services, a private warehouse and logistics company, to operate the General Purpose Foreign Trade Zone. The General Purpose Zone is located at 2055 South Seventh Street, Suite A in San Jose’s Monterey Corridor industrial area.
- As the grantee, the City of San Jose is responsible for administering the Foreign Trade Zone in Santa Clara, Monterey, San Benito and Santa Cruz counties, and the southern part of Alameda and San Mateo counties.
- Recycling Market Development Zone provides low-interest state loans of up to $2 million and also technical, marketing and location assistance to San Jose manufacturers using recycled feedstock (such as glass, paper, plastic, or used tires). To find out more, contact the Environmental Services Department at 408-975-2527.
- Special Tenant Improvement Program (STI) in vacant buildings encourages companies to locate in vacant buildings within industrial and research and development uses, as well as office space in the Downtown Core. The program offers expedited plan review. For more information, contact the Building Department at 408-535-7757.
- San Jose Storefronts Initiative –is a $250,000 Office of Economic Development grant opportunity to help small businesses lease vacant spaces by offsetting the cost of City permits, fees and taxes. The goal of this Initiative is to strengthen the economic vitality of Downtown San Jose and the City’s Neighborhood Business Districts.
The City of San Jose’s Office of Economic Development invites proposals from applicants in the following categories:
- Individuals: entrepreneurs or sole proprietors
- Small business owners
- Nonprofit organizations
- Landlords or property owners working with prospective businesses/tenants; and
- Contractors working with businesses and/or property owners
- City of San Jose Financial/Tax Incentives
- Business Tax Incentives are routinely available through the City of San Jose. Please check the Economic Development website for up to date incentive information.
- Grow Morgan Hill Fund
- Can be used City wide and provides qualified small business with SBA 7(a) loans.
- Other Loan Programs are on hold.
- Small Business Fee Deferral Program
- The Morgan Hill Redevelopment Agency has developed the Small Business Fee Deferral Program in an effort to foster commercial and industrial development by helping to minimize the potential burden of City impact fees (e.g., sewer, traffic, and in-lieu utility under grounding and water fees) on new construction, expansion, or relocation projects.
- City of Gilroy Tax Offset Program
- Single Businesses
- In the case of sales tax, the business must generate at least $50,000 in sales tax revenue to the City annually. The total offset may be accumulated for a period not to exceed three (3) years. The three-year period will commence upon the issuance of the certificate of occupancy for the business. The tax offset must be applied against the development fees due for the project, and may not exceed the amount of development fees plus interest thereon due from the new business.
- Commercial or Industrial Centers
- In the case of sales tax, a single center comprised of multi-tenant businesses may qualify for the incentive if it collectively generates an average of at least $50,001 in sales tax revenue to the City annually.
- The amount of sales tax generated by the multi-tenant center must: (1) exceed amount $50,000 annually when averaged over a three year period, and (2) be equal to an amount of $2.00 or more per gross square foot of the multi-tenant center building area in excess of 25,000 square feet. The total offset may be accumulated for a period not to exceed three (3) years. The three-year period will commence one year from the issuance of the first certificate of occupancy to occupy a space at the center. The tax offset must be applied against the development fees due for the project, and may not exceed the amount of development fees plus interest thereon due from the commercial/industrial center.
- Multi-tenant/Owner Industrial Developments
- Developers of multi-tenant/owner industrial buildings may be eligible for a job-offset credit if the businesses that will ultimately occupy the multi-tenant/owner building employ a cumulative total of at least 25 permanent employees that meet the minimum wage and benefit requirements stated above.
- The minimum employment level must be met within two (2) years of the issuance of the first certificate of occupancy for the first building. The minimum 25 permanent employees that meet the wage and benefit package must be maintained for a minimum of three (3) consecutive years following the initial attainment of the guaranteed employment level.
- Single Businesses