S E R V I C E D E S C R I P T I O N

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1 S E R V I C E D E S C R I P T I O N RURAL OPPORTUNITY ZONE (ROZ) BUSINESS ACCELERATOR PILOT PROGRAM A NETWORK KANSAS FUNDING PROGRAM The is a service of the Kansas Center for Entrepreneurship (DBA NetWork Kansas). NetWork Kansas Resources to Start & Grow Businesses in Kansas Call Toll-Free: (877) Fax: (316) P.O. Box 877 Andover, KS

2 TABLE OF CONTENTS 1.0 Introduction Roles and Responsibilities Criteria for Submission Evaluation Criteria Evaluation Deadlines & Notifications

3 1. 0 I n t r o d u c t i o n The Rural Opportunity Zone (ROZ) Business Accelerator is a pilot program offered by NetWork Kansas in partnership with the Kansas Department of Commerce. The mission of the is to partner with regional business support providers ( NetWork Kansas Partners ) in selected ROZ counties to provide or obtain seed capital funding for for-profit Kansas entrepreneurs and for-profit business startups and expansions. This is a pilot program available in the seven counties with 20 or more approved ROZ applications as of April 2013: Kingman, Marion, Norton, Phillips, Pratt, Sherman, and Thomas Counties. The business owner seeking funding must be a confirmed participant in the ROZ program offered by the Kansas Department of Commerce. What are Rural Opportunity Zones? The law designates 50 counties in Kansas as Rural Opportunity Zones (ROZ), providing a 100 percent state income tax waiver for up to five years and repayment of up to $3,000 per year ($15,000 maximum) in outstanding student loans. To be eligible for the state income tax waiver, individuals must have lived outside the state for at least the past five years prior to moving to a ROZ county and have Kansas source income of less than $10,000 per year over the past five years. To be eligible for student loan repayment, individuals must have graduated from an accredited post-secondary institution and moved to a ROZ county. The student loan repayment incentive is open to both Kansas and non-kansas residents. More information on the ROZ program can be found at the Kansas Department of Commerce website: What is the? The is a program that provides matching funds to eligible ROZ applicants that are starting or purchasing an existing business in an eligible ROZ county. The program is a service of NetWork Kansas, which was established as a component of the Kansas Economic Growth Act of 2004 to further entrepreneurship and small business growth as a priority for economic and community development in the State of Kansas. Entrepreneurs and existing small businesses access funding by working closely with local or regional NetWork Kansas partners. Backed by more than 500 partners statewide, the NetWork Kansas service promotes an entrepreneurial environment by connecting entrepreneurs and small business owners with the expertise, education and economic resources they need in order to succeed. What is a NetWork Kansas Partner? Entrepreneurs may only access funding by working with local or regional non-profit business support providers. Examples are the seven regional foundations: Northwest Kansas Planning and Development Commission, North Central Kansas Community Network Co., Glacial Hills Resource Conservation and Development Region, Inc., East Central Kansas Rural Development Tax Credit Program, Inc., Southeast Kansas, Inc., South Central Kansas Economic Development District, and Great Plains Development, Inc. Other examples include the Main Street Kansas organizations, Chambers of Commerce, USDA, economic Kansas Center for Entrepreneurship

4 development agencies and other non-profit organizations charged with assisting for-profit entrepreneurs and small businesses in Kansas. A NetWork Kansas partner must submit an application on behalf of the business. Loans from the must be matched by a minimum 40% match of funding for the project from a financial institution, NetWork Kansas partners, and/or investment by the entrepreneur. Match can include the first year of a ROZ county s reimbursement to the entrepreneur for student loan repayment. Other NetWork Kansas funds can support the business project but cannot be counted as match for the. This includes funding support from other NetWork Kansas funding programs, including the E- Community or StartUp Kansas funding programs. Repayment If, under the terms of any loan, the applying partner receives any payment or repayment from the client, NetWork Kansas shall be reimbursed for its percentage share within sixty days. Payment or repayment includes interest, principal or any other value arising out of the loan without limit, unless NetWork Kansas has released the partner from this obligation in writing. Loan Terms If the loan application is approved by the committee, the terms of the loan will be a 5% interest rate for up to 7 years. Six-month interestonly payments will be considered for applications that score highly with the review committee. Example scenario: ROZ applicant wants to start a business and needs $25,000 for equipment purchase. ROZ applicant invests $3,500 in the project and a certified development company is willing to loan $5,000. ROZ applicant can count $8,500 as match, as well as $1,500 from the county s first year contribution to student loan repayment. This total of $10,000 match allows for the ROZ applicant to submit a application requesting a $15,000 loan to NetWork Kansas. A loan requires no additional collateral and is paid back to the NetWork Kansas by the partner. The loan recipient sends their repayment check to the partner and the partner sends NetWork Kansas their portion of the check. It is also important to note that applications including bank involvement, owner capital contribution and/or third party investors may increase the chances of the committee approving a proposal. However, these criteria are not mandatory to apply for funding. Kansas Center for Entrepreneurship

5 2. 0 T h e R O Z B u s i n e s s A c c e l e r a t o r R o l e s & R e s p o n s i b i l i t i e s It is important to understand the roles of NetWork Kansas and the NetWork Kansas Partner in the process of providing funding to entrepreneurs through the : 1. NetWork Kansas does not provide funding directly to any business. It only provides funding through certain qualified local and regional non-profit organizations. The applying organization must be a NetWork Kansas Partner. 2. The Business Accelerator cannot exceed 150% of the sum of funds provided by a financial institution, the partner, the entrepreneur, and the first year of an eligible ROZ county s reimbursement to the entrepreneur for student loan repayment. Higher matches increase the chance of being awarded funding. 3. All and partner matching funds must be passed through to the business as cash, with the exception of the first year student loan repayment (if applicable). 4. The minimum amount that can be applied for is $10,000 and the maximum is $25,000. The interest rate is fixed at 5% and the length of the note cannot exceed 7 years. NetWork Kansas Partners shall utilize standard policies and procedures developed by the partner, and shall be the initial point of contact for any business receiving ROZ Business Accelerator funding. The advantages of this approach are: 1. Clearly defined accountability: Utilizing the partner and regional organizations to provide ongoing management of financial resources, direct interaction with the entrepreneur or business, and responsibility for the success of each implementation. 2. Community/Business connection: The success of participating entrepreneurs will be enhanced by assistance within each local area. This can be accomplished most effectively through local and regional organizations who are involved in each particular area. Kansas Center for Entrepreneurship

6 3. 0 C r i t e r i a f o r S u b m i s s i o n The purpose of the is to financially assist eligible ROZ counties and partners with new business startups and expansions and then closely track the successes and failures. Tracking will be done by the NetWork Kansas staff and will consist of a follow-up report due at the end of each calendar year. The result will be learning the keys to success in operating a successful small business, determining the economic impact of NetWork Kansas programs on the state, and continuing to improve NetWork Kansas funding programs. It is the goal of the to improve results over time by learning from each project. There are two sets of criteria for the approval of funding: 1) Statutory criteria set forth by the legislature in the Kansas Economic Growth Act of 2004; and 2) Criteria set forth by the Board of Directors of the Kansas Center for Entrepreneurship. Statutory Criteria include the following: 1. Of the combined total of the and partner seed funding in the proposal, a minimum of 40% must be provided by a financial institution, a NetWork Kansas Partner, the entrepreneur s investment and/or the first year of an eligible ROZ county s reimbursement to the entrepreneur for student loan repayment. In other words, the cannot exceed 150% of the total matching funds. 2. The applying partner organization must provide an explanation showing how the funds will be used as capital for qualified for-profit entrepreneurs. 3. The applying partner organization will ensure funds are utilized by a for-profit business located in one of the seven eligible ROZ counties (Kingman, Marion, Norton, Phillips, Pratt, Sherman, Thomas). 4. The applying partner organization will provide an annual report to the Center s Board of Directors as per statute and guidelines. Kansas Center for Entrepreneurship

7 Requirements set forth by the Kansas Center for Entrepreneurship s Board of Directors include the following: 1. The applying partner must join the NetWork Kansas database of organizations providing services to Kansas entrepreneurs and small businesses. 2. The applying partner will supply information about the business requesting funds in order to track the success of services provided to Kansas entrepreneurs and small businesses. 3. The application of the partner should relay how the funds will be utilized to add resources, enable the business to add jobs, increase tax revenue, and/or improve the overall quality of life to a rural or distressed community. The application will also specify whether the business receiving funds is to assist a startup, business expansion, or if funds are intended to retain an existing business. 4. The partner will provide proof of all private and public capital as listed on the ROZ Business Accelerator application. Kansas Center for Entrepreneurship

8 4. 0 E v a l u a t i o n C r i t e r i a Proposals for funding submitted by the applying organization will be evaluated by a quorum of the StartUp Kansas Loan Committee of the Kansas Center for Entrepreneurship, which must include the President of the Kansas Community Entrepreneurship Fund and at least three members of the Kansas Center for Entrepreneurship Board of Directors. Going forward, the StartUp Kansas Loan Committee will evaluate both StartUp Kansas applications and ROZ Business Accelerator applications for NetWork Kansas. The StartUp Kansas Loan Committee will review each proposal based upon the following criteria: 1. Adherence to the statutory criteria and the requirements set forth by the Kansas Center for Entrepreneurship Board of Directors. 2. Confirmation that the business owner is a participant in the ROZ program offered by the Kansas Department of Commerce. 3. Explanation of the entrepreneur s need and purpose for funding. 4. Projected sales or sales growth and any projected employment growth. 5. The percentage of the matching funds. 6. The presence of any third party funding. 7. The partner demonstrates the capacity to support the entrepreneur and the proposal and provide the required feedback to the. 8. The partner demonstrates capacity to collaborate with NetWork Kansas and other NetWork Kansas providers. 9. Local support: the proposal demonstrates local support for the project through cooperation of organizations and community leaders. 10. Purpose of funds: The primary purpose of the funds is to provide matching funds for the startup or expansion of operations and generally does not include third party work for business plan development or other consulting services. Kansas Center for Entrepreneurship

9 5. 0 E v a l u a t i o n D e a d l i n e s & N o t i f i c a t i o n s The application can be downloaded from the NetWork Kansas website ( at any time and can be submitted via at any time throughout the year. The StartUp Kansas Loan Committee meets the 3 rd week of each month to review applications received by the 1 st day of the month. Funding partners will be notified of the status of proposals by the last day of the month. Kansas Center for Entrepreneurship