Economic development reps visit Sidney to discuss funding opportunities

The Nebraska Department of Economic Development (DED) hosted a presentation covering the state’s innovation programs aimed at encouraging and supporting the transfer of Nebraska-based technology and innovation to rural and urban areas.

In 2010, the state of Nebraska commissioned a study that looked at how Nebraska compared to other states in fostering an entrepreneurial environment and in the strength of industries. From that report came a four-part piece of legislation known as the Talent Innovation Initiative, which aimed at advancing business innovation, supporting startup companies, aiding small businesses and supporting talent and development efforts in the state, through different funding programs.

The first program the DED discussed is a planning grant known as Small Business Innovation Research (SBIR). Eleven federal agencies provide grant funding to small businesses in order to help the federal government solve problems.

“An example of this would be the Department of Defense looking for a specific missile defense system,” Business Innovation Manager, Joe Fox began. “They put out a solicitation for all small businesses across the country to try and solve that problem or come up with the technology to meet their needs. The idea is that eventually the company has a customer in the federal government or this technology has some commercial potential that gets into the market.”

Naturally it is advantageous for Nebraska to have companies located in the state win these federal grants. The phase zero SBIR planning fund gives small companies $5,000 to apply for those grants.

The grants are extremely competitive and the application process is long and complicated. The DED considers helping with this process one of its key roles.

The phase I SBIR matching grant meets the funds received by a small business from one of the 11 federal agencies by as much as 65 percent, as long as the business plans on doing 51 percent of the work in the state of Nebraska. The program awards a maximum of $100,000. This allows the small business to expand their research as well as provide “gap financing.”

The phase II SBIR prototyping grant provides $50,000 to companies with fewer than 500 employees that are developing prototypes or new products with commercial potential. The grant needs to be matched by a non-state source like bank loans or investors.

“These programs have only been in existence about two years this month,” Fox said. “We have about $1 million a year to award through these $50,000 grants per calendar year, and we had awarded all the money by July. In January, we have another million dollars to begin awarding, so we start taking applications in December.”

The DED made the effort to visit Sidney because many of the applications stem from companies in the Lincoln and Omaha areas. They wanted to raise awareness of the programs in the panhandle.

Under the Business Innovation Act, the DED also offers lending programs.

The first program is the Nebraska Progress Loan Fund (NPLF), which is federal money that the DED applied for and drawn down from the federal treasury. The DED is able to offer loans up to five million dollars for small businesses who are developing, modifying or developing new technology for expanding their business.

These loans are short-term and competitive. There is a requirement of a one-to-one match from private banks or investors. These programs are used to incentivize other financing.

The Nebraska Microenterprise Assistance Program provides $300,000 per year to community organizations to provide technical assistance to small businesses.

Aside from grant programs, the DED offers seed capital and angel programs.

The Angel Sidecar Fund allows Invest Nebraska to contribute finances alongside individual angels that live in the state. There are currently three angel groups in Nebraska—The Nebraska Angels, Treetop Ventures and Dundee Venture Capital.

To help motivate angel investments in the state, there is an Angel Investment Tax Credit program. An individual can receive up to $300,000 in tax credits and couples can receive up to $350,000 for angel investments as long as an application is submitted through the DED. The business receiving the investment also has to go through an approval process. The DED is allocated $3 million per year for these tax credits each year.

“We’ve awarded over $6 million in grants and investments to over 80 companies over the last two years are we’re starting to see some of the returns from those investments by way of additional jobs,” Fox said. “We’ve certainly seen millions in increase and increased revenues for those companies.”