Democratic U.S. Sen. Sherrod Brown proposed business incubator legislation he says would create business incubators that would ultimately lead to more jobs in Ohio.
The bill, deemed the Business Incubator Promotion Act (BIPA) is aimed at creating high-skill, high wage jobs across the state. Brown said that an independent report completed by the Economic Development Council (EDA) has indicated that every $10,000 in EDA funds invested in business incubators has led to the creation of 47 to 69 jobs in the state.
During a media teleconference, Brown said Wednesday the act helps ensure funding for areas in the state suffering from economic hardship. He claimed Ohio has become the model of business incubators working to create business.
“In Ohio, we’re seeing how business incubators foster regional economic development and spur small business expansion,” Brown said. “Our state is on the cutting edge when it comes to the successful development of new small businesses.”
The Business Incubator Promotion Act would provide grants, through a competitive process, to help regions introduce new businesses and expand existing ones. Business incubators typically provide help for starting up new or expanded business by helping provide initial office space, training, and other start-up resources for fledgling businesses.
“This legislation is aimed at helping these regions create higher-skill, higher-wage jobs — meaning that more Ohio communities could support homegrown entrepreneurship,” Brown said. “If we want to promote an economy fueled by innovation, we must better connect our entrepreneurs with the resources they need to turn an idea in a lab into a product on the market — and that’s what the Business Incubator Promotion Act would do.”
Brown did not release a goal for revenue that could be created by the legislation during the meeting, but he did say approximately $30 of tax revenue was created for every $1 invested in incubators according to a report by the National Business Incubation Association (NBIA).
NBIA Policy Analysis and Research Director Linda Knopp and Summit Data Communications President Ron Seide, who participated in the media teleconference, discussed the importance of business incubators and how the bill will help more entrepreneurs across Ohio launch their small businesses.
“As communities across the state look for new ways to spark economic growth, the Business Incubator Promotion Act would allow incubation programs to assist even more entrepreneurs, promoting innovation and creating jobs throughout Ohio and across the nation,” Knopp said.
“Business incubators are an outstanding example of how government can invest in infrastructure to aid in the development of businesses that will make America competitive in the 21st-century global economy,” Seide said. “The assistance of the Akron Global Business Accelerator was critical to our early development and contributed directly to the high-tech jobs we’ve created for our region.”
According to an independent report commissioned by the Economic Development Administration (EDA), every $10,000 in EDA funds invested in business incubators generates an estimated 47 to 69 local jobs.
In rural areas, business incubator projects are the most effective type of EDA projects. The NBIA estimates that in 2005, business incubators supported more than 27,000 start-up companies providing 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.
The Business Incubator Promotion Act ensures the most economically distressed areas and those in need of EDA funds have opportunities to receive those funds. It also promotes business incubators by both constructing new incubators and expanding and supporting existing incubators.
The federal share for EDA funding is generally 50 percent. In cases of higher unemployment, that percentage can increase up to 80 percent.
The legislation would also give the EDA authority to award grants for the development of business incubator feasibility studies and plans for the construction of new or expansion of existing business incubators, as well as the implementation of those studies and plans. It also gives the EDA the ability to award grants to support existing and new operations of business incubators to assist them in becoming self-sustainable.
Brown released a county-by-county list of businesses that have been already helped by incubator funding or were top target areas for funding. Auglaize County or surrounding nearby counties were not included on the list.