Flexible ‘Soft-Cost’ Grants Depending On Community Needs
17 Apr 2023
There are plenty of grants available that cover the hard costs, or the direct physical costs, of construction. However, finding grants that can be allocated to cover the soft-costs of construction projects is generally much more difficult. These soft-costs are the indirect expenses that are involved in construction, such as permits, architectural & engineering costs, and financing fees. Most soft-cost grants are available at the state or hyperlocal level. Below are some examples. We encourage economic developers to use these to spur ideas and see what options exist within their own local communities.
Ripple Effect Program (Iowa Only)
The Ripple Effect Program is an Iowa-based institution that fosters partnerships between rural communities and local independent telecommunication companies to promote enterprises encouraging economic development.
These partnerships aim to generate loans and grant funding for common soft-costs including environmental assessments, engineering fees, and architectural costs.
This program offers financial assistance to new companies through grants, loans, and initiatives intended to perpetuate steady growth within the client’s sector. These initiatives come with low-interest rates so awardees can focus on growing their business instead of fixating on financial burdens.
The various types of loan and grant funding include (all of which are matching):
- Up to $5,000 in grants toward community planning
- Up to $10,000 in loans for small businesses
- Up to $50,000 in loans for medium to large businesses
- Up to $20,000 in loans for Inter-Tribal Council (ITC) Revolving loan Funds (Rural Economic Development Loan)
- Up to $30,000 in grants for ITCs to set up a Revolving Loan Fund (Rural Economic Development Grant)
In addition to assisting small businesses, the Ripple Effect Program also provides matching loan and grant funding for the same telecommunication organizations that partner with Aureon and IADG. The program also offers matching loan incentives for existing telecommunication organizations willing to participate in the USDA’s Rural Economic Development Loan and Grant (RDELG).
With the help of the Ripple Effect Program, the once-closed Sacred Heart School in Templeton, Iowa, was reopened as a community events center. Ripple Effect Works For Community got underway in 2009 with a $5,000 grant used to market the new investment opportunities that the building offered.
Most recently, the Historical Sharon High School and Community Center received $7,000 to help restore and upgrade the building’s amenities. This restoration is still underway and will eventually allow the building to house multiple non-profit organizations aimed at helping local community members.
Since 2009, Ripple Effect grants and loans have helped transform 29 businesses and properties into profitable community cornerstones that reinvest back into the community.
Soft Cost Grants in Groton, CT
In Groton, businesses have multiple ways of funding soft costs. The city, for example, has a program where grant funds are available to reimburse the costs associated with opening or expanding a business in the City of Groton, so long as they have fewer than 25 employees and fit within the city’s target industries. Economic Development is rolling out a second grant program - the Town of Groton Business Pivot Program. Designed to help businesses adapt to the pandemic response, this grant program is funded through ARPA and can be used for soft costs such as financial, marketing, strategic planning, training, software, signage, etc. It can also be used for hiring and benefits, operational expenses, inventory, and equipment - making it extremely versatile.
Effects Of Soft Cost Grants On Economic Development
Fostering mutually beneficial relationships between members of rural communities and businesses that are focused on economic development is an effective way to revitalize struggling businesses and provide opportunities for members of these rural communities.
Additional Funding - Loans
Revolving Loan Funds
A Revolving Loan Fund is a type of gap financing, or bridge loan, that provides a quick infusion of capital to a small business that a conventional lender would ordinarily deny because of a business’s small size. Both for-profit and nonprofit organizations are eligible to receive RLFs of no more than $20,000, and the interest rate has yet to be set by the program.
Microenterprise loans are only available to for-profit small businesses. Non-profit organizations will have to apply for an RLF separately. The maximum matching loan amount under this program is $10,000, and the interest rate has yet to be determined by the program.
Business Opportunity Loans
These loans are also only available to for-profit organizations. A single entity can borrow anywhere from $25,000-$75,000 at 4-7% interest as long as the money goes toward creating a new business or expanding one that already exists.
Want to learn more? Download the Economic Developers Guide to Grants That Can Fund Key Initiatives whitepaper today!
For more information and assistance in applying for grants, contact Golden Shovel to learn more about how these initiatives can help you.