WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) introduced new legislation today that would support and create “business incubators” in hard-hit regions of Ohio and the country. Under Brown’s proposal, more Ohio communities would be eligible to receive funds, with support through the Economic Development Administration (EDA) directed to economically hard-hit regions.
“Business incubators should be at the forefront of economic recovery,” Brown said. “If we want to get our economy back on track, we need to support new companies that create new jobs. In Ohio, business incubators are fostering the growth of cutting-edge companies and bringing new economic development to our state. Just as incubators help nurture new businesses, the federal government should support the growth of incubators.”
Business incubators provide support to existing and start-up companies, helping them to grow and create jobs. According to an independent report commissioned by the EDA, for every $10,000 in EDA funds invested in business incubators, an estimated 47-69 local jobs are generated. In rural areas, business incubator projects are the most effective type of EDA projects.
Brown was joined by Dinah Adkins, president & CEO of the Athens-based NBIA and Ray Leach, CEO of JumpStart, a Cleveland-based incubator. They released an analysis of the jobs and economic activity created through select Ohio incubators in 2008. The analysis evaluated the number of businesses and jobs created through a sample of 15 incubators in various regions of the state. In 2008, the incubators supported the growth of more than 300 new business more than 780 new jobs.
The National Business Incubation Association (NBIA) estimates that in 2005, business incubators supported more than 27,000 start-up companies that provided full-time employment to more than 100,000 workers – generating more than $17 billion in annual revenue. NBIA also points to research showing that every dollar of federal funds devoted to an incubator generates approximately $30 in local tax revenue.
Brown’s bill, The Business Incubator Promotion Act, would make more communities in Ohio eligible to receive funds through the EDA and would increase the share the federal government devotes to incubators in economically-distressed areas. The bill would ensure that areas facing high unemployment or poverty rates have opportunities to secure the EDA funds they need. It would also promote business incubators through funding to support the construction of new incubators and the expansion and support of existing incubators. A business incubator would be eligible to receive a maximum award of $750,000 for a feasibility study and $3 million for a three-year implementation period.
The Fiscal Year 2010 budget proposal included $50 million to support business incubation programs in economically distressed communities. Brown’s bill would increase the federal share from 50 percent to up to 80 percent in areas of high unemployment or poverty rates. It would also help more communities receive increased funding by giving priority to counties with average unemployment rates that have topped the national average for 12 months, rather than 24 months.