Jobs Bill Directs Dollars to High-Growth Industries

Small Business

New lending program designed to stimulate business expansion, job creation

By Bill DeRosa

One of the highlights of the 2010 state legislative session was the passage of the jobs bill: HB 5435 (now Public Act 10-75). The law is an updated version the Connecticut Insurance Reinvestment Act (IRA) of 1994. Its new provisions are based on recommendations by the Majority Leaders’ Job Growth Roundtable, a group of legislators and leaders from the business and academic communities created in 2009 to help the state regain jobs lost in the recession.

“The original law was designed to stimulate job growth in the insurance industry through the use of tax credits,” says David Pepin, senior advisor at Ironwood Capital in Avon and member of the Job Growth Roundtable. “The tax credits were meant to attract investment in the industry and induce outside insurance companies to relocate in Connecticut,” he explains. “Given where things were trending at the time, that didn’t happen, and the tax credits expended in the state budget went unused.” Until now, that is.

New Life for an Old Law

PA 10-75 uses those tax credits to incent investment in companies across a spectrum of industries, not just insurance.

Among other things, the law creates a program to direct various forms of financing to high-growth small and midsize firms, including startups. It reserves significant investment dollars for companies in information technology, specialty manufacturing, business services, life sciences, healthcare services, financial services, environmental services, and clean technology. Financing options include up to $150,000 in pre-seed capital and loans of up to $500,000 (or more) for other purposes.

The lending program is funded with money invested by insurance companies, some $94 million so far. In return for their investments, insurers receive vested tax credits: the same credits that went unused under the original law: toward their state premium taxes.

Who Lends the Money?

Under PA 10-75, the state Department of Community and Economic Development has certified two national investment firms to manage investment dollars: Advantage Capital Partners and Enhanced Capital Partners.

Advantage Capital selected Ironwood Capital to identify, underwrite, and manage its $72 million Advantage Capital Connecticut Fund. The Enhanced Capital Connecticut Fund: currently with $22 million available: is managed by Enhanced Capital’s Connecticut office in Old Lyme.

The funds fill an important niche at a time when economic conditions make raising capital challenging.

“We expand business access to capital beyond that available in current markets from commercial banks,” says Victor Budnick, managing partner of Ironwood Capital Connecticut. “With early-stage companies, for example, we co-invest with other private investors, as well as Connecticut Innovations, to provide the risk capital critical to supporting rapid growth. Our investments typically occur before these companies have achieved the sustainable financial results that underlie most bank financing.”

Who Gets the Money?

Under the jobs bill, lending is limited to companies whose principal operations are in Connecticut. An eligible firm must have at least 80% of its employees living in Connecticut or 80% of its payroll dollars going to state residents. Companies must also have fewer than 250 employees and less than $10 million in net income in the previous year.

Companies most likely to receive financing under the program are those with strong management, high growth potential, and competitive advantages: including a dominant market position, a proprietary product or service, or technological superiority.

“Small and medium-size companies with a strong presence in Connecticut and a need for capital to support rapid growth or sustain a successful operation can benefit most,” says Budnick.

What to Bring to the Table

Budnick advises that businesses seeking financing come prepared with a well-conceived business plan; historical financial statements for at least the past three years, and financial projections that show, among other things, the amount of capital required, the ability to repay that capital, and the enterprise value that management expects to create.

“From that point,” he says, “we work closely with prospects to understand their specific needs, opportunities, and challenges.”

For information about financing available through the Advantage Capital Connecticut Fund, contact Victor Budnick at or John Strahley at To learn more about the Enhanced Capital Connecticut Fund, contact Elizabeth (Liddy) Karter at 203.376.7958.

Bill DeRosa is editor of CBIA News. He can be reached at

Leave a Reply

Your email address will not be published. Required fields are marked *

Stay Connected with CBIA News Digests

The latest news and information delivered directly to your inbox.