Department of
Economic & Community Development
Matthew Kisber, Commissioner

Q: What grant programs does ECD administer for economic and community development?
A: The department administers the Community Development Block Grant (CDBG) program, the Appalachian Regional Commission (ARC) program, the Delta Regional Authority (DRA) program, the FastTrack Infrastructure Development Program (FIDP) and various energy-related grant and loan programs (see FAQ: Energy Grants and Loans for more information). The state also administers the allocation of private activity bond authority.

Q: Are these programs funded by the state?
A: The CDBG, ARC and DRA programs are funded by the federal government. The FIDP program is state funded. The bond program is the authority for the exemption of interest on individual development bonds from federal taxation.

Q: How much money is involved in these programs?
A: ECD receives $30 million in CDBG funds each year, and receives about $5 million via the ARC program. DRA received $387,000 in 2004. Last year ECD received $17.5 million in FIDP funding. Tennessee's allocation of bond authority is based on $80 per capita.

Q: What can these funds be used for?
A: CDBG and ARC funds can be used for almost anything except political activities and for funding the general operation of government. In practice, however, most of the funds go for projects which create jobs (grants for industrial infrastructure and loans for industrial buildings and equipment) and for projects that are related to health and safety. FIDP funds can only be used for industrial infrastructure (with most going for water and sewer improvements for new and expanding manufacturing businesses). Bond financing goes primarily for buildings and equipment for manufacturers.

Q: Is this assistance in the form of grants or loans?
A: Both. The basic distinction is that grants are made for things which are in the public domain (water, sewer, transportation improvements), and loans are made for things which are for exclusive use of one industry (buildings and equipment).

Q: Who is eligible to apply?
A: For CDBG the applicant must be a city or county government. Most applicants for FIDP, ARC and DRA grants are also cities and counties, although industrial boards and other quasi-government units may apply. The applicants for bond authority are always local industrial boards since they are the ones who actually issue the bonds.

Q: How does one make an application for assistance?
A: In all five programs there are formal application forms that must be submitted. The CDBG, ARC and DRA programs are more complex because of the federal regulations that are involved. Development districts, consultants and engineers are available throughout the state to assist in application preparation.

Q: How long does it take to get an application approved?
A: It varies considerably depending on which program is being applied for and the quality of the application. The federal programs are more complex and applications take longer to be approved than do the applications for the FIDP program. Federal programs may take weeks or months to be approved. FIDP grants can normally be approved in two or three weeks. The time involved for approval will be lengthened considerably in all programs if applications are incomplete, have conflicting information or raise additional questions that must be answered.

FAQ: Energy Grants and Loans

Q: Does Tennessee provide technical or financial assistance for energy conservation measures in small businesses?
A: Yes. The Energy Division offers existing small businesses energy loans up to $300,000 at 0% interest for businesses located in Three-Star communities and 3% annual interest for all others. Loans may be repaid over a period of up to seven years. The loans must be used to identify, purchase and install approved energy efficiency measures. The loans fund purchase and installation of approved energy efficiency measures. Free energy audits are available for prospective applicants.

Q: What are the qualifications for the Small Businesses Energy Loans or technical assistance?
A: Briefly: The candidate has less than 300 employees or less than $3.5 million in annual gross sales or receipts.

Q: What is the purpose of the Small Business Energy Loan Program?
A: The purpose of the Small Business Energy Loan is to assist in the identification, purchase and installation of approved energy efficiency measures onto or into the existing Tennessee-located facilities, processes and/or operations. Energy loans cannot be used as venture capital to start a new business.

Q: How much can I borrow?
A: You can borrow up to $300,000 at 0% interest for businesses located in Three-Star communities and 3% for all others. Loans may be repaid monthly over a period of up to seven years.

Q: What businesses are eligible for a Small Business Energy Loan?
A: Small businesses located in Tennessee that have less than 300 employees or less than $3.5 million in annual gross sales or receipts and are able to meet financial analysis and collateral screening criteria are eligible to participate in the Small Business Energy Loan Program.

Q: My company is located just across the Tennessee-Kentucky border. Can I get an energy loan?
A: No, the Small Business Energy Loan can only be used on facilities that are located in Tennessee. Check with the Kentucky Energy Office to see if they have a comparable loan.

Q: What can I use an energy loan for?
A: Energy loans must be used to identify, purchase and install a variety of energy efficiency/saving measures such as insulation, double pane windows, heating and cooling equipment and lighting, to name a few. Loans cannot be used to start a new business or provide operating capital.

Q: Can I get an energy loan to replace my home heating and cooling unit?
A: No, an energy loan can only be used for commercial, industrial and other business-related energy projects.