In the zone: small business benefits from the rebirth of enterprise zones

Entrepreneur, May, 1996 by Cynthia E. Griffin

As for the social service block grants, Cuomo says, these are funds zone grant administrators can use to pay for programs ranging from community development to business loans and grants.

But don't get the idea that empowerment zones are a government handout, stresses Harry J. Bowie, co-chairman of the Mid-Delta Empowerment Zone Alliance in Mississippi. Bowie, whose state has one of the three rural zones, says the federal dollars are not new money but are more of a prioritizing of the things normally done for cities and communities.

The Mid-Delta zone application divided Mississippi's myriad problems into three broad categories--community development, which includes providing housing, improving education and overcoming racism; economic development, with a goal of bringing in more capital, providing job training and fostering development of industry; and sustaining community and economic development by providing necessities like health care and child care so parents can work.

"We want to create a climate in which agencies and community-based organizations can empower themselves to overcome these problems," explains Bowie. "We are saying to banks, 'We want you to invest more money, to support entrepreneurship, business development and housing in these small towns.' "

Bowie already sees the benefits of the empowerment zone. "In a little town called Durant, the community was worried about the deterioration of its downtown. So the existing businesses that got the tax credit used it to revitalize the area, and the banks agreed to lend them the money to do it."

Grants and tax exemptions aren't the only way the government is helping enterprise zones. The Small Business Administration plans to establish full or partial One-Stop Capital Shops in all the empowerment zones to provide loans, loan guarantees and equity investments through microloans, Small Business Investment Companies, Specialized Small Business Investment Companies, Small Business Lending Companies and Certified Development Companies.

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As the divergent experiences of Richie Johnson and the Thorsons in Evansville show, no one enterprise zone is right for all businesses. Finding the one that fits you takes a lot of research.

Susan Arpan, manager of the San Jose, California, enterprise zone and president of the California Association of Enterprise Zones, suggests entrepreneurs look beyond the immediate, dazzling prospect of inexpensive real estate to consider long-term concerns such as worker training, ease and expense of obtaining supplies, and accessibility to your market. You must also evaluate the particular enterprise zone program to make sure it's not a stand-alone entity but is coupled with other business support services, such as easier licensing and permitting procedures.

"Do your homework first," advises Thorson. "Find out where you can go to get the benefits and take care of all the paperwork before you move in."

Like anything worth having, enterprise and empowerment zone benefits are not going to fall in your lap, and not everything offered will work for your company. But with a little due diligence, you might find the zones will boost your bottom line--and benefit the community, to boot.