Since July 2014, IEDA has awarded forgivable loans to seven companies interested in establishing an employee stock ownership plan (ESOP). The ESOP Formation Assistance Program provides up to $25,000 to defray the upfront costs of feasibility studies for forming an ESOP.
The ESOP Advisory Panel will consider new applications at its next meeting on July 21, 2015, with applications due by July 6.
An ESOP is both a tool for allowing the owners of companies to share the business equity with employees and a retirement plan for those employees. Businesses that have implemented ESOPs have seen a number of benefits:
- Employees gain an ownership stake in the business, increasing their personal wealth without the risks associated with creating or purchasing their own business.
- Employee job security and personal satisfaction increase.
- ESOP businesses are more productive and more profitable, last longer in the marketplace, and provide greater shareholder returns.
The following companies have established an ESOP since receiving assistance through the program:
- Library Binding Services, Inc., Des Moines – provides supplies to book manufacturers and manufactures preservation and presentation materials
- Seaberg Industries, Inc., Davenport -- provides machined fabrications to manufacturers such as Caterpillar, John Deere and Hon Industries
- Kreg Enterprises, Inc., Huxley -- manufactures tools, accessories and equipment for woodworkers
- Absolute Group, Inc., Slater -- specializes in commercial, DOT, municipal, residential and agricultural concrete construction as well as soil erosion control and storm water pollution prevention
The following companies were awarded incentives in May and are expected to complete the feasibility study process soon:
- Carroll Distributing and Construction Supply, Inc., Ottumwa -- distributes construction materials, contractor supplies and equipment to the construction trades
- Communications Engineering Company, Inc., Hiawatha -- installs and services systems including fire alarm, nurse call, access control, audio/video and mass notification in industries such as manufacturing education, government, finance and the education markets
- ICE Technologies, Inc., Pella -- provides a broad range of outsourcing, consulting and managed IT services to healthcare providers in 23 states
ESOPs are a promising tool for retaining businesses in Iowa communities. In addition to the forgivable loan program to assist with feasibility studies, Iowa offers a 50 percent deduction from state income taxes for the net gain from the sale of stock to an ESOP.