The U.S. government sets aside over $100 billion per year to incentivize economic development and job growth at the local, state, and federal levels in the form of tax credits, grants, and loans. Unfortunately, most of this money either goes unclaimed, or goes to large corporations that can afford to have teams of tax attorneys and consultants on staff looking for these opportunities. In fact, about 90% of the funds go to large companies.
The challenge — and it is a big one — is that the credits and funds are scattered across thousands of municipal websites or buried in complex legislation.
Database of funding opportunities
Subcity is building the first ever comprehensive database of incentives and funds at the local, county, state, and federal levels for small to medium-sized manufacturers (SMMs). Its online, technology-driven application allows SMMs to take advantage of these incentive dollars without the costs of expensive consultants.
The service has launched in California — home to 40,000 manufacturers. The company plans to expand into other states with large numbers of manufacturers including New York, Illinois, Texas, and beyond. Subcity charges a 10% fee of the dollars its helps clients collect.
Democratize access
“Our aim is to democratize access to capital for manufacturers,” said Alex White, CEO, Subcity. “We’re making it easy, user friendly, and fast to discover and take advantage of billions of dollars in economic development incentives and tax credits. For our first clients, we've found an average of $10,000 to $40,000 in overpaid state sales tax. And we recently secured access to $10M in tax-credits for Dr. Squatch, a California-based manufacturing client. This represents one of the top 25 largest tax-credits to ever be awarded in the state’s history.”
How it works
Subcity has digitized hundreds of government programs by going through both legislation and the tax code. It then identifies the NAICS codes, locations, and other parameters that a company must meet in order to qualify for each specific financial opportunity. Users go to the subcity.com site and register by answering a few short questions such as whether they’ve purchased or leased equipment that will be used for manufacturing. Then they securely authenticate their accounting or ERP systems and the software does the rest before one final client review. Finally, Subcity customizes and prioritizes the programs most important to each client in terms of the financial gain.
How many incentive programs are there out there?
The bulk of incentive programs come from the county, state, and federal levels. Local incentives tend to flow down from federal or state funds. “On the state level, there's probably more than 100 different programs spread over many different departments, from grants to tax credits, to financing low cost loans and everything in between,” said White.
On the county level, each one has 25 - 30 of its own incentives. To provide an idea of how many different incentives are available to companies in just the Golden State alone, California has 58 counties. The federal level is the most static, with most programs being in existence for many years.
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