Guest column/Opportunity zones can work for business, too
It is almost as though you can’t pick up a newspaper or go to a media website without reading about opportunity zones. Those articles, for the most part, deal with the pros and cons of opportunity zones and focus on real estate developers and multi-family housing.
There is another side to opportunity zones that hasn’t gotten much play lately. That side has nothing to do with millionaires and real estate development. It has to do with how we can make opportunity zones work for small and medium sized businesses, and thus give these businesses another tool to help them create permanent jobs in both rural and urban environments.
We at the Cleveland District of the U.S. Small Business Administration have found a way to do that.
It may not work for all small businesses, but we see it working for a certain size business. That business typically has a sales size that exceeds $10 or $15 million or is an early stage/start-up biotech or high-tech venture. Businesses like that, all have one thing in common — the need for expansion funding. The investors also have one thing in common — the need to shelter capital gains and realize the return on their investment.
The business owner and entrepreneur can either start their own qualified opportunity zone fund, or seek friends and family that need to shelter capital gains by investing in the business through a qualified fund.
Or the business can tap into qualified funds that already exist to fund business expansions.
The business owner and entrepreneur must be aware that by attracting investment they are giving up a piece of their company. They must also find a way to buy out the investor at year 10, so that the investor can realize a non-taxable gain on the appreciation of their business investment.
If you think you fit the above profile or are interested in making an investment in an opportunity zone business, you are in luck. We are having an opportunity zone outreach workshop from 8:30 a.m. to noon on Jan. 15, at Tri-C Manufacturing Tech Center in Cleveland.
For information and to register, go to cleozone.eventbrite.com or call Patsy Welsh at (216) 522-4172.
(Goldberg is district director of the Cleveland office of the U.S. Small Business Administration.)