Lowering the up-front costs of your aerospace business
To get your business or a new project off the ground, there is always an inevitable an up-front investment. The Washington State Department of Commerce Office of Economic Development and Competitiveness (OEDC) offers an array of ways to help lower these up-front costs, so your aerospace company is well-equipped for success.
“Commerce is committed to the aerospace industry in our state, and incentives, grants, and loans reflect that commitment,” said Grace Yoo, assistant director for OEDC. “Washington aerospace is number one in the nation because of how it innovates, adapts, and delivers high quality service, whatever market changes exist. We will continue investing in industries like aerospace because it strengthens communities. That’s our mission.”
Grace Yoo began her leadership of OEDC in fall of 2024, leading the division’s work to translate Washington’s global competitiveness into local impact, creating jobs and supporting small businesses across the state’s 39 counties. Yoo has made it a priority to recognize, and is a strong believer in, the capability of economic empowerment to unlock better outcomes in the health and safety of our communities.
Fueling business growth
Help to offset business investments translates into job creation and community reinvestment. This is especially true for those aerospace companies located in rural Washington traversing the I-90 corridor. These state incentives range from tax credits to exemptions or deferrals for specific activities, such as adding new equipment. They also include grants and loans specifically for very small businesses in underbanked communities, like those in rural Washington.
“Part of the work we undertake fuels expansion,” said Yoo. “Small business owners often face a financial conundrum when starting or growing an enterprise. Our support is meant to help offset their expenses.” These include specific ways to encourage investment in new technologies, equipment or energy sources, building new manufacturing facilities or hiring workers in rural communities.
Aerospace Incentives
Washington State offers a specialized range of incentives that are geared toward aviation and aerospace because these are high-growth industries within our sector-based strategy for economic prosperity. The tax-based incentives include:
- Tax credit for preproduction development expenditures: This is a B&O tax credit available to manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes.
- Tax credit for taxes paid on business facilities: This is also a B&O tax credit, equal to the property taxes paid on new buildings, associated land and the increased value of renovated buildings. A B&O tax credit is also available for personal property tax paid on machinery and equipment and computer equipment and peripherals
- Tax exemption for new facilities: This tax exemption is for those who build in order to manufacture commercial airplanes, commercial airplane fuselages, and commercial airplane wings.
- Tax exemption for computer hardware, software, and peripherals: This tax exemption is for manufacturers of commercial airplanes or component parts of commercial airplanes, or product developers and a handful of others. The exemptions apply to items used in the development, design, and engineering of aerospace products or in providing aerospace services.
Grant programs
Grant funds support a range of activities – specific initiatives, business expansion, innovative research, and more. They require no repayment, and sometimes include sustainable funding for programs and infrastructure. Progress is monitored to follow progress and final objectives. OEDC grants currently include the following:
- The Evergreen Manufacturing Growth Grant: This grant supports manufacturing jobs, research and development jobs, and regional cluster acceleration strategies. There are two application types available for this program: One for individual businesses, and a second for innovation cluster organizations. Read more from the 2024 awardee announcement: www.commerce.wa.gov/commerce-awards-2-million-to-encourage-innovative-business-and-manufacturing-expansion-statewide
- The Industrial Site Readiness Grant: The program offers funding to boost the state’s portfolio of project-ready sites and attract new investment. It is open to public entities, including cities and counties, port districts, and Native American Tribes. Read more from the 2024 awardee announcement: www.commerce.wa.gov/commerce-invests-2-million-to-accelerate-industrial-site-development-across-state
- The Industrial Symbiosis Grant: These grants support collaborative projects advancing the circular economy, funding efforts to find beneficial uses for industrial waste. Learn more by visiting the Choose Washington State Industrial Symbiosis program page: www.choosewashingtonstate.com/why-washington/our-key-sectors/industrial-symbiosis
- STEP Grants: Qualifying companies who are new to exports or entering new markets can get up to $10,000 to offset expenses. Washington aerospace companies also realize considerable value by partnering with Commerce at our Choose Washingtonbooth for international trade exhibitions, including the Paris Air Show. Learn more on the Export Voucher program landing page: www.commerce.wa.gov/export-assistance/export-vouchers
Business loans
The work of entrepreneurs and small business owners drives our economy. Along with tax incentives and grants, Commerce developed several loan programs to serve the needs of small businesses across the state. This funding is provided through the U.S. Treasury’s State Small Business Credit Initiative (SSBCI). These loan programs aim to promote entrepreneurship, support small business ownership, and increase the flow of capital in underserved communities.
- Small Business Flex Fund 2 (Micro Loan Program): The program works with participating Community Development Financial Institutions (CDFIs) to fund capital needs among the smallest businesses and non-profit organizations in Washington. It is especially designed for businesses and nonprofits with 50 or fewer employees and up to $5 million in revenue. Learn more on the Flex Fund website: www.smallbusinessflexfund.org
- Owner-Occupied Commercial Real-Estate Loan Program (CRE): The program helps small businesses qualify for financing of owner-occupied real estate loans for such things as tenant improvements, construction, purchase or refinance. The program is administered by Heritage Bank (HBCDE, LLC). It offers companion loans with SSBCI funds and targets loans up to $5 million with 10-year terms. Learn more on the Owner-Occupied CRE Loans website: www.heritagebanknw.com/home/about/hbcde/ssbci
- Collateral Support Program (CSP): The CSP complements the SBA’s 504 Loan Program. These funds cover short-term construction loans and offer bridge loan funds. The CSP is administered by Evergreen Business Capital Community Finance (EBCCF), a nonprofit lender offering financing solutions for small businesses in the Pacific Northwest. Learn more on the CSP website: www.ebccf.org/cspwa
Commerce aims to help offset the real costs of expanding, relocating or starting your aerospace business in Washington State. Whether through tax incentives, grants or loans, the cash infused into an organization can make a pivotal difference in the long-term success of a business or specific project.
To learn more about becoming a partner-exhibitor at international trade shows, contactJoanna Boatwright, OEDC export assistance trade specialist at: Joanna.boatwright@commerce.wa.gov
To learn more about Washington State as a place to start and grow your aerospace business, visit: www.choosewashingtonstate.com
