Programs for Small Businesses and Capital Investors Help to Boost the Economy

on Jul 21, 2015 in Business

CAPCO Programs, also known as, Certified Capital Company Programs, are strategically designed to boost the economy and develop economic growth in a geographic area in a particular state. Presently, 20% of the U.S. states have implemented such programs, including Alabama, Colorado, Florida, Missouri, New York, Texas, and Wisconsin. The program becomes an economic development apparatus that supports and forms a structure for local venture capital that is accessible to small businesses. There are benefits for participating states, capital investors, and small business owners. The federal, state, and local governments realize the importance of economic developmental growth because it helps to boost the economy by creating job opportunities in struggling locations.

Various established revenue generating companies and corporations are inspired to invest in Certified Capital Companies with tax credit offers and specified rate of investment returns. Insurance companies, for an example, are eligible for tax credits, if qualified. The tax credit eventually increases over a certain amount of time that is invested in the state. It’s a huge benefit for the CAPCO programs state participant because it generates venture capital pools.

There are success stories in states, such as, Alabama, Missouri, New York, and Texas. Diguim Company in Alabama, for an example, is a small business to receive capital funding and hire over 100 employees with higher pay incentives. Small businesses in its start-up or early stage and companies seeking expansions are eligible for investment capital when specific requirements are met. These companies approved for funding becomes a portfolio company.

Small business owners, participating U.S. states, and venture capital investors receive benefits of the CAPCO programs. Small businesses are able to receive funds to hire employees, purchase equipment, and receive guidance in development and management. The programs help participating states to create economic development goals in jurisdictions that are in need of growth. States can raise capital to help small businesses by relying on private and large companies and corporations for investment funding. An important benefit for the state is the program increases its state tax revenue and local tax revenue.

Venture capital investors receive the benefits of creating a diverse investment portfolio in different small companies to eliminate possible risks. The investing company and corporation are offered a desired rate of return on their initial investments. Economic development is the overall objective of state CAPCO programs to keep people employed and economically stabilize small businesses.