AUTHORITY: Implementing and authorized by the Technology Advancement and Development Act [20 ILCS 700].

SOURCE: Emergency rules adopted at 13 Ill. Reg. 19753, effective December 1, 1989, for a maximum of 150 days; emergency expired April 30, 1990; adopted at 14 Ill. Reg. 9016, effective, May 29, 1990; amended at 15 Ill. Reg. 15040, effective October 4, 1991; amended at 18 Ill. Reg. 8415, effective May 23, 1994; amended at 18 Ill. Reg. 17213, effective, November 17, 1994; old Part repealed, new Part adopted at 25 Ill. Reg. 15997, effective November 29, 2001; emergency amendment at 29 Ill. Reg. 15045, effective September 21, 2005, for a maximum of 150 days; emergency amendment repealed at 29 Ill. Reg. 19284, effective November 3, 2005, for the remainder of the maximum 150 days; emergency amendment at 29 Ill. Reg. 18950, effective November 3, 2005, for a maximum of 150 days; emergency expired April 1, 2006; amended at 30 Ill. Reg. 8450, effective April 19, 2006.

SUBPART A: ADMINISTRATIVE REQUIREMENTS

 

Section 545.10  General Purpose

 

The purpose of the Technology Advancement and Development Act is described in Section 1002 of the Act [20 ILCS 700/1002].  The purpose is to assist Illinois firms, in an increasingly global marketplace, to remain competitive by promoting the development and commercialization of new and advanced technologies.  This is to be achieved through several strategies including:

 

a)         promoting private sector and nonprofit research institutions that serve as intermediaries operating programs and undertaking activities authorized by the Act;

 

b)         commercializing new technology products, services, and processes; and

 

c)         modernizing the industrial base of small and medium-sized firms.

 

Section 545.20  Definitions

 

a)         Definitions in the Act:  The following words and phrases, for the purpose of this Part, have the same meaning respectively ascribed to them in Section 1003 of the Act [20 ILCS 700/1003].

 

            "Advanced technology project" means any area of basic or applied research or development which is designed to foster greater knowledge or understanding, or which is designed for the purposes of improving, designing, developing, prototyping, producing or commercializing new products, techniques, processes or technical devices in present or emerging fields of health care and biomedical research, information and communication systems, computing and computer services, electronics, manufacturing, robotics and materials research, transportation and aerospace, agriculture and biotechnology, and finance and services.

 

            "Business expense" includes working capital financing, the purchase or lease of machinery and equipment, or the lease or purchase of real property, including construction, renovation, or leasehold improvements, but does not include refinancing current debt.

 

            "Business project" means any specific economic development activity of a commercial, industrial, manufacturing, agricultural, scientific, financial, service or other not-for-profit nature, which is expected to yield an increase in jobs or to result in the retention of jobs or an improvement in production efficiency.

 

            "Department" means the Illinois Department of Commerce and Economic Opportunity.

 

            "Director" means the Director of the Illinois Department of Commerce and Economic Opportunity.

 

            "Financial assistance" means a loan, investment, grant or the purchase of qualified securities or other means whereby financial aid is made available to or on behalf of a business project or advanced technology project.

 

            "Intermediary organization" means any participating organization including not-for-profit entities, for-profit entities, State development authorities, institutions of higher education, other public or private corporations, which may include the Illinois Terrorism Task Force, or other governmental or private entities necessary or desirable to further the purpose of this Act engaged by the Department through any contract, agreement, memoranda of understanding, or other cooperative arrangement to deliver programs authorized under the Act.

 

            "Investment loan" means any loan structured so that the applicant repays the principal and interest and provides a qualified security investment to serve both as additional loan security and as an additional source of repayment.

 

            "Loan" means acceptance of any note, bond, debenture, or evidence of indebtedness, whether unsecured or secured by a mortgage, pledge, deed of trust, or other lien on any property, or any certificate of, receipt for, participation in, or an option to any of the foregoing. A loan shall bear such interest rate, with such terms of repayment, secured by such collateral, with other terms and conditions, as the Department shall deem necessary or appropriate.

 

            "Participating lender or investor" means any trust company, bank, savings bank, credit union, merchant bank, investment bank, broker, investment trust, pension fund, building and loan association, savings and loan association, insurance company, venture capital company or other institution, community or State development corporation, development authority authorized to do business by an Act of this State, or other public or private financing intermediary approved by the Department whose purposes include financing, promoting, or encouraging economic development financing.

 

            "Qualified security investments" means any stock, convertible security, treasury stock, limited partnership interest, certificate of interest or participation in any profit sharing agreement, preorganization certificate or subscription, transferable share, investment contract, certificate of interest or participation in a patent or application or, in general, any interest or instrument commonly known as a "security" or any certificate for, receipt for, guarantee of, or option, warrant or right to subscribe to or purchase any of the foregoing, but not including any instrument which contains voting rights or which can be converted to contain voting rights in the possession of the Department.

 

b)         Other Definitions:

 

            "Act" means the Technology Advancement and Development Act [20 ILCS 700].

 

"Leveraged dollar award" means grant funds awarded to the grant applicant intended to be used as leverage to secure additional funding from other public or philanthropic sources.

 

"Partnership" or "joint venture" means any organization, formed either through contract or mutual agreement, where two or more persons agree to do business together.

 

"Product" means a commodity or service with commercial value that is either further developed or brought to market through use of grant funds. 

 

            "Recipient" means any entity receiving financial assistance under the Act.

 

"Service" means any service that would advance the commercialization of a technology with applicability to the homeland security industry. This would include, but is not limited to, the protection of intellectual property rights, business continuity and recovery, research and development, and technology integration.

 

            "Small and medium size business" means any for-profit business with 1,000 or fewer employees assigned to work locations within the State of Illinois.

 

(Source:  Amended at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.30  Administrative Requirements

 

a)         Record Retention and Review – An entity receiving financial assistance shall, as deemed necessary by the Department, permit the Department, its representatives, or its designee, to have full access to and the right to examine any pertinent documents, papers, and records of the recipient involving transactions related to financial assistance received under the Act for such a period of time as specified in the agreement between the Department and the recipient.

 

b)         Financial Management Standards – An entity receiving financial assistance shall maintain a financial management system structured to provide for accurate, current, and complete disclosure of the expenditures of such financial assistance. The entity is accountable for financial assistance received under the Act and shall maintain effective control and accountability over all funds, equipment, property, and other assets obtained through such financial assistance.  Records shall be sufficient to permit the tracking of funds to a level of expenditure adequate to ensure that funds have not been spent unlawfully.

 

c)         Audits – Audit requirements shall be specified in the agreement (e.g., grant, investment, or loan agreement) between the entity receiving financial assistance and the Department or between the entity receiving financial assistance and an intermediary organization.

 

d)         Complaint Process – In the case of a complaint by an entity receiving financial assistance, the Department shall follow the procedures outlined in the Department's Administrative Hearing Rules (56 Ill. Adm. Code 2605).

 

e)         Patent and Technical Information – Copyright and patent policies of an entity receiving financial assistance must provide for protection of technical information, and identify ownership and control of patents.  Except when specified to the contrary in the agreement between the Department and the recipient, the State of Illinois shall be granted a no charge license to use the technology or materials covered by any patent or copyright for which the technology or material was either conceived or reduced to practice with such financial assistance.

 

f)         Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act [30 ILCS 705/10], all interest earned on funds held by the recipient of a grant awarded pursuant to the requirements of the Act shall become part of the grant principal when earned unless the grant agreement provides otherwise.  However, any interest earned on funds subject to a Department grant after the grant's expiration date shall become part of the grant principal and shall be so treated for all purposes.

 

g)         Reporting – Unless otherwise specified in the agreement between the Department and the recipient, an entity receiving financial assistance shall report financial and programmatic data to the Department on a regular basis using formats provided by the Department.  Report formats and content shall be customized to the specific program and form of financial assistance. Generally, the Department requires quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

 

1)         Expenditures – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall report actual expenditure of financial assistance using expenditure formats supplied by the Department.  Expenditure summaries are to be submitted to the Department by the 15^th day following the end of each fiscal quarter in which any expenditure of financial assistance is made.

 

2)         Program Report – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall submit a program report in a format provided by the Department.  Generally, the program report shall include a narrative describing the entity's progress towards achieving objectives and activities as specified in the agreement with the Department or an intermediary organization.  Program reports shall be submitted to the Department by the 15^th day following the end of each fiscal quarter.

 

h)         Confidentiality of Trade Secrets and Commercial or Financial Information – Protections relating to the confidentiality of trade secrets, commercial, or financial information regarding the operation of any enterprise are specified at Section 4002 of the Act.  The protections apply to any information provided by an entity applying for, or receiving, financial assistance under the Act.  To the extent authorized by the Freedom of Information Act [5 ILCS 140], the Department shall not make public any information disclosing  program supported technical information if such disclosure would affect the commercialization potential of the project, service, or process being promoted.

 

i)          Suspension and Termination – The Department shall, after notice to the entity, suspend the financial assistance and withhold further payments or prohibit the entity from incurring additional obligations against such financial assistance:

 

1)         if the General Assembly does not appropriate funding at a level sufficient to fund the program or activity;

 

2)         if the Department determines that the entity has failed to comply with the terms and conditions of the agreement in whole or in part;

 

3)         if an entity receiving financial assistance consistently fails to submit required reports, fails to maintain required records, fails to protect inventory, or misuses equipment;

 

4)         if there are findings of fraud and abuse; or

 

5)         if the Department and the entity receiving financial assistance agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditures.

 

j)          Right to Verify Information – At the sole discretion of the Department or an intermediary organization acting on behalf of the Department, staff of the Department and/or an intermediary organization may conduct phone interviews or field visitations to evaluate and verify information submitted as part of an application for financial assistance.

 

k)         Access to Project Site – During the application process, or during the conduct of a technology or business project, the sponsoring organization and/or applicants shall provide the Department and/or an intermediary organization access to the place of business and site where the business project will be undertaken.  The Department and/or the intermediary organization shall provide notice to the business prior to requesting such access and shall request access only during the business' normal working hours.

 

l)          Director's Waiver of Limitations – The Director may waive the limitations cited at Sections 545.220(c)(2), 545.320(d), and 545.330(d).  A waiver may be granted when the Director of the Department determines that a waiver of these limits is required to meet the purposes of the Act [20 ILCS 700/3004(a), 3004(b), 3004(c), and 3515(c)].  In determining whether to grant such a waiver, the Director may consider factors, if applicable, including, but not limited to:

 

1)         the project would not go forward but for the State's participation;

 

2)         the business is located in a distressed community;

 

3)         there is a strong likelihood of generating significant new or increased business or investment within the State; and

 

4)         there are sufficient program funds available, in view of competing requests.

SUBPART B: TECHNOLOGY CHALLENGE GRANT PROGRAM

 

Section 545.110  Purpose

 

The purposes of the Technology Challenge Grant Program are specified at Section 2001 of the Act [20 ILCS 700/2001].  First, the Department is authorized to make grants that provide initial funding for projects that, in turn, help secure federal research and development projects for the State.  Second, the Department is authorized to provide initial grant funding for projects that identify and develop technologies capable of commercialization.  Third, the Department is authorized to fund programs and activities that provide a catalyst for and strengthen the State's capacity to commercialize new technologies.

 

Section 545.120  Authorized Programs and Activities

 

a)         Grants may be awarded for the activities specified at Section 2002 of the Act, including:

 

1)         Advanced Technology Projects – The Department may award initial grant funds for applied innovation research projects that respond to unique, advanced technology projects and which foster the development of Illinois' economy through the advancement of the State's economic, scientific, and technological assets.

 

2)         Leveraged Technology Projects – The Department may award initial grant funds for applied innovation research projects to assist eligible applicants in the State to apply for, or qualify for and leverage, federal funds awarded for advanced technology projects concerning research and development, business innovation research or technical development, or transfer of useful technology to the private sector.

 

3)         University-Industry Partnerships – The Department may grant funds for joint university and industry initiatives that create high-skill employment opportunities and internship activities that enable graduates and faculty to stay and work in Illinois.  The Department may also grant funds for joint university and industry initiatives designed to strengthen the relationship between industry and academia, so that applied university research is responsive to the needs of Illinois' industries.

 

4)         Technology Commercialization Centers – The Department may award grant funds to create and operate centers of excellence in technology commercialization, innovation evaluation, and intellectual property management that encourages the growth of new enterprises based on technologies developed at Illinois research centers, including technology partnerships, technology consortiums or research centers, and industry technology associations that are, or will be, established to perform research and development in present and emerging technologies that can be developed for use by commerce and industry.

 

5)         Technology Transfer Projects – The Department may award grant funds for technology transfer projects involving promotion of new or innovative technologies among small and medium-sized Illinois manufacturers where the technologies have immediate commercial application.

 

6)         Continuous Improvement Projects – The Department may award grant funds to provide for planning and operational support for statewide support that improves practices in technology commercialization, including needs assessment and evaluation of the status of technology implementation throughout the State. [20 ILCS 700/2002]

 

7)         Capacity and Program Development Projects – The Department may award grant funds to qualified not-for-profit organizations or educational institutions in order to support service delivery improvement projects, in order to extend Department capacity in relation to implementation of homeland security market development programs, or for the operation of legislatively directed councils or coordinating bodies.

 

8)         Product and Service Development Projects – The Department may award grant funds to individual companies or partnerships with operations in Illinois for products or professional services that address unique or emerging national needs in homeland security, safety or defense, or support the development of solutions to these needs.

 

b)         Allowable Costs – Allowable costs are specified in Section 2002(b) of the Act, including costs for capital improvements, equipment, contractual services, commodities, personnel, support costs, including telecommunications, electronic data and commodities, or other costs.  All costs are subject to the approval of the Department.  Indirect costs shall be limited to no more than 15% of direct grant costs. [20 ILCS 700/2002(b)]

 

c)         Combination with Technology Enterprise Development Centers – As a means of increasing cost efficiency of program delivery, the Department may combine program responsibilities for activities authorized under subsection (a)(4), Technology Commercialization Centers, with activities authorized under Technology Enterprise Development Centers, as described in Section 545.240 of this Part.  As authorized by the Department through an agreement, Technology Enterprise Development Centers may serve as Technology Commercialization Centers.

 

(Source:  Amended at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.130  Eligible Applicants

 

Section 2001 of the Act specifies entities eligible to apply for funding under the Technology Challenge Grant Program.  Eligible applicants include:

 

a)         Institutions – Eligible institutions include universities, colleges, community colleges, nonprofit research foundations or laboratories, State research institutions, and industry technology associations.

 

b)         Technology Partnerships – Technology Partnerships include any partnership or consortium established by a formal project agreement between:

 

1)         two or more private industries, or

 

2)         any combination of one or more private industries with one or more universities, colleges, community colleges, nonprofit research laboratories, nonprofit research foundations, or State research institutions.

 

c)         Private Enterprise – This category includes any private sector enterprise developing or commercializing technology or leveraging federal technology development financing, including but not limited to the small business innovation research program. [20 ILCS 700/2001]

SUBPART C: ENTERPRISE DEVELOPMENT AND INVESTMENT PROGRAM

 

Section 545.210  Purpose

 

The purposes of the Enterprise Development and Investment Program are defined at Section 3001 of the Act.  The program primarily targets new and growing Illinois firms. The goals of the program are as follows:

 

a)         provide investments, loans, or qualified security investments to or on behalf of young or growing businesses or, on behalf of new or emerging business through financial intermediaries as they commercialize advanced technology projects; and

 

b)         fund regional technology enterprise development centers that make available resources and expertise in furthering the technical or managerial skills of owners; aid the ventures in locating financing; and help new companies with product development and marketing.

 

Section 545.220  Direct Investment Strategy

 

As authorized by Section 3001 of the Act [20 ILCS 700/3001], the Department may directly provide investments, loans, or qualified security investments to promote the commercialization of advanced technology.  Generally, investments may be made to finance any new process, technique, product, service, or device that is now, or that may become, commercially exploitable.

 

a)         Eligible Applicants – Direct investments may be made in young, growing businesses, and businesses who have qualified for Federal Small Business Innovation Research funds. [20 ILCS 700/3004(a)]

 

b)         Allowable Activities – Direct investments may be made for the purposes specified in Section 3004 of the Act.  Financial assistance proceeds may be used for expenses that include, but are not limited to:

 

1)         costs incurred for research and development;

 

2)         amortizable organizational costs;

 

3)         working capital financing;

 

4)         the purchase or lease of machinery and equipment; and

 

5)         acquisition, improvement, or rehabilitation of land and buildings. [20 ILCS 700/3004(a)]

 

c)         Limitations – Investments are subject to the following limitations:

 

1)         The Department may make direct investments and loans based on the Department's current investment strategy in cooperation with private sector investment companies, private investors, or conventional lending institutions which also assume a portion of the investment loan or financing for the business project [20 ILCS 700/3001].  The Department may decline to make any direct investment that does not meet the Department's current investment strategy. The Department shall require applicants to show the source of new, unexpended, actual or anticipated matching funds covering a minimum of 50% of total advanced technology or business project costs.  Matching funds covering a minimum of 25% of total advanced technology or business project costs shall be from sources independent of the applicants.

 

2)         Direct qualified security investments or investment loans shall not be made for more than $500,000 and shall not be made for more than 50% of the business project costs unless the Director determines that a waiver of these limits is required to meet the purpose of the Act [20 ILCS 700/3004(a)].

 

Section 545.230  Portfolio Investment Strategy

 

As authorized by Section 3001 of the Act, the Department may indirectly provide investments, loans, or qualified security investments through financial intermediaries to young or growing businesses for a business project, or as they commercialize advanced technology projects.

 

a)         Eligible Applicants – The Department may provide investments in revolving fund portfolios with intermediary organizations or participating lenders or investors. The financial assistance may be made available to qualified intermediaries that assume a responsibility for the administration of the projects funded through the investment.  Qualified intermediaries, at a minimum, shall:

 

1)         have a successful seed/early stage investment track record; and

 

2)         be capable of effectively evaluating the commercialization feasibility of advanced technology or business projects.

 

b)         Selection of Portfolio Funds – In making a determination to participate in an investment or loan portfolio, the Department shall find that the applicant will, at a minimum:

 

1)         commit to a three to one, private (or federal) dollar, leverage for each dollar invested in the portfolio by the Department;

 

2)         commit to making best efforts to invest the monies from the fund in Illinois companies, or companies willing to relocate to Illinois, at a disproportionate rate; and

 

3)         the business or industry sector targeted by the fund is likely to expand as a result of investment and increase job creation within Illinois.

 

c)         Allowable Activities – Intermediary organizations may use the Department's funds to provide investments, loans, or qualified security investments to   young or growing businesses for business projects, or for commercialization of advanced technology.

 

d)         Limitations – The amount of money that shall be invested in an intermediary shall be determined, in part, based on the Department's current investment strategy. The Department may decline to invest in any intermediary or portfolio that does not meet the Department's current investment strategy.  In determining the amount to invest, the Department may also consider the total amount of State funds available for investment, the amount of private or federal funds available to leverage the State's investment, the proposed types of investments, the geographic locations that will benefit from the proposed investments, and market factors relevant to the appropriateness of the proposed investment activities, as determined by the Department.  The Department may invest up to, but shall not exceed, $2,000,000 in an authorized intermediary's investment portfolio.

 

Section 545.240  Illinois Technology Enterprise Development Centers

 

a)         Purpose – The purpose of Illinois Technology Enterprise Development Centers is provided in Section 3004.5 of the Act.  The Department may, subject to available appropriated funds, working with the Illinois Coalition, establish one or more regional technology enterprise development centers whose mission is to assist entrepreneurs, innovators, and start-up firms in high-growth, high technology sectors in furthering the technical or managerial skills of owners; aid the ventures in locating financing; and help new companies with product development and marketing in support of new venture formation within the State [20 ILCS 3004.5(a)].

 

b)         Allowable Costs – Allowable costs are defined at Section 3004.5(b) of the Act. Grant funds may be used to support the operation of technology enterprise development centers. Grant funds may be used to help subsidize expenses, as approved by the Department, for:

 

1)         personnel;

 

2)         fringe benefits;

 

3)         travel;

 

4)         equipment;

 

5)         supplies;

 

6)         commodities, including telecommunication or other costs;

 

7)         contractual services;

 

8)         other support costs;

 

9)         capital improvements; and

 

10)       revolving funds.

 

c)         Technical Assistance and Support Services – Per Section 3004.5(c) of the Act, technology enterprise development centers may provide crucial business information at affordable prices for firms that are developing early-stage, technology-oriented manufacturing projects including:

 

1)         general or short-term assistance, general outreach, feasibility studies for new venture formation, and research assistance for new venture creation;

 

2)         innovation evaluation and market research to evaluate the viability of technology, product, or service or the market potential of technology, product, or service;

 

3)         technical assistance related to management and operations and strategic partnering and assistance in the implementation of strategic manufacturing and marketing alliances; and

 

4)         service in locating new technologies or technological solutions.

 

d)         Financial Services – Per Section 3004.5(d) and (e) of the Act, technology enterprise development centers may provide financial services that include:

 

1)         financial packaging to enhance proposals and make companies more competitive for federal or private funding;

 

2)         access to private investor capital through venture capital events and regional venture capital networking programs;

 

3)         management of local for-profit or limited profit seed capital funds; and

 

4)         pre-seed financing to start-up technology-based businesses to commercialize new technology. Financing options may include:

 

A)        micro-loans;

 

B)        small grants; and

 

C)        equity investment capital for seed funding, product commercialization and prototype development, and commercial introduction and marketing.

 

e)         Professional Development of ITECs – As provided in Section 3004.5(f) of the Act, the Department may provide grant funds to support professional development and capacity building of the technology enterprise development centers within the State, as may be required for the administration, operations, research, analysis, or training of the centers.

 

f)         Procedures for Establishment of Centers

 

1)         Identification of Service Regions – The Department shall designate locations in the State to be targeted for the creation of technology enterprise development centers.  When making regional designations, the Department shall solicit recommendations from stakeholder groups, including the Illinois Coalition and the Illinois Technology Office, and shall consider factors, including but not limited to:

 

A)        concentrations of high technology business establishments;

 

B)        concentrations of entrepreneurs and innovators;

 

C)        access to capital markets;

 

D)        access to technical support and related service providers; and

 

E)        proximity to universities, research facilities, and laboratories.

 

2)         Identification of Recipients of Financial Assistance – The Department, in selecting an intermediary organization to operate a center, shall first solicit the advice of stakeholders, including the Illinois Coalition and the Illinois Technology Office. Subsequently, the Department may negotiate with an intermediary organization to receive financial assistance for the purpose of operating a technology enterprise development center.  In addition to the advice of stakeholders, in determining which applicants shall be awarded a grant, the Department shall examine:

 

A)        prior compliance with loan or grant awards;

 

B)        the relationship of a proposed project to the State's future economic growth;

 

C)        the qualifications and expertise of organizations undertaking the effort;

 

D)        the applicant's understanding of the requirements and needs of entrepreneurs, innovators, and start-up firms in high-growth, high technology sectors;

 

E)        the potential of the applicant's project to provide an economic benefit of the State;

 

F)         the likelihood that the project has a potential for creating new ventures in the State; and

 

G)        the potential of the applicant and/or its consortium to finance the regional center. [20 ILCS 700/3004.5(g)]

 

3)         Application for Financial Assistance – The Department shall issue instructions and formats to selected applicants for the submittal of applications for financial assistance to support technology enterprise development centers.  Applications shall include information such as:

 

A)        a description of the related experience of the applicant agency;

 

B)        a discussion of market niches served;

 

C)        measurable objectives;

 

D)        a description of the available services, including:

 

i)          marketing plan to attract entrepreneurs;

 

ii)         networking with and access to related services and providers;

 

iii)        management consulting assistance and coaching;

 

iv)        technology transfer services; and

 

v)         access to venture capital;

 

E)        an implementation schedule;

 

F)         a description of center staffing and expertise;

 

G)        a line item budget proposal;

 

H)        a description of matching funds by source and amount; and

 

I)         a description of service fee and investment policies.

 

4)         Renewal of Awards – The Department may renew a grant award for a subsequent year for any technology enterprise development center judged to be meeting performance objectives, as evaluated by the Department under this subsection (f)(4), during the current grant period.  In making determinations regarding the renewal of grant awards, the Department shall consider evaluative criteria, including but not limited to:

 

A)        success of public relations events;

 

B)        success in providing technical information;

 

C)        the number of prototype project evaluations completed;

 

D)        the number of market research assessments completed;

 

E)        the success of management consulting assistance provided;

 

F)         the number of projects enrolled for ongoing services;

 

G)        the total amount of venture capital accessed for projects; and

 

H)        the number of new ventures established and jobs created.

SUBPART D: BUSINESS MODERNIZATION PROGRAM

 

Section 545.310  Purpose

 

Per Section 3501 of the Act, the Department may create one or more programs to assist the State's existing mature business and industry base to adopt and use appropriate technologies. The programs may vary in breadth of activities, services, and projects in accordance with the level or complexity of the manufacturers' needs or problems.

 

Section 545.320  Modernization Retooling Loan Program

 

a)         Purpose – The purpose of the Modernization Retooling Loan Program is defined in Section 3505 of the Act.  The Department may, subject to appropriated funds, establish a loan program to improve business production systems and work processes.  Such improvements shall result in the preservation and/or creation of private sector jobs by increasing the firms' long-term competitive viability.

 

b)         Eligible Applicants – Any small, medium-sized or mature Illinois business may make an application for financial assistance under this program.  An eligible business includes any for-profit business located in Illinois organized as a sole proprietorship, corporation, joint venture, partnership, association, or cooperative. For the purpose of this program, a mature business is one (including predecessor companies) that has been in continuous profitable operation for at least two years or has a meaningful operating history.

 

c)         Allowable Activities – Per Section 3505(a) and (b) of the Act, loans may be provided to, or on behalf of, the State's mature, small, or medium-sized businesses for the modernization and installation of advanced technologies or processes.   A loan made for company modernization or retooling may be for any purpose consistent with the objectives of the Act, including but not limited to:

 

1)         purchases of advanced machinery;

 

2)         equipment and tooling;

 

3)         organizational expenses for services;

 

4)         personnel training;

 

5)         corporate restructuring;

 

6)         working capital;

 

7)         acquisition, improvement, or rehabilitation of land and buildings; or

 

8)         any other business expense reasonably related to the project.

 

d)         Limitations – Per Section 3505(b) and (c) of the Act, the following limitations apply to this program:

 

1)         No loan made by the Department, or by an intermediary organization making a loan on behalf of the Department, shall be used to pay for the retirement of previous debt unless the debt is a part of the purchase or lease of machinery or equipment that is being upgraded.

 

2)         A loan under this program shall not be made for more than $500,000 or for more than 25% of the business project costs unless the Director determines that a waiver of these limits is required to meet the purposes of the Act.

 

Section 545.330  Modernization Grants Program

 

a)         Purpose – The purpose of the Modernization Grants Program is defined at Section 3515 of the Act.  Subject to appropriated funds, modernization grants may be made for the purpose of financing, competitive assessments, or productivity improvement services that the Department determines may result in technology enhancement, retooling, restructuring, or other competitiveness improvements.

 

b)         Eligible Applicants – Grants may be made to, or on behalf of, Illinois' mature, small, or medium-sized businesses.

 

c)         Authorized Activities – Per Section 3515(a) of the Act, grants may be awarded for:

 

1)         undertaking feasibility studies, competitiveness assessments, and productivity audits to restore their businesses' competitiveness; or

 

2)         the modernization and installation of advanced manufacturing systems or processes that will improve the businesses' production systems and work organization, or will preserve and create private sector jobs by increasing the firms' long-term competitive viability.

 

d)         Limitations – Per Section 3515(c) of the Act, modernization grants to eligible applicants shall not exceed $100,000 or 50% of the project costs, unless the Director determines that a waiver of these limits is required to meet the purposes of the Act.

 

e)         Role of Intermediary Organizations – Per Section 3515(b), assistance authorized under this Section may be in the form of direct grant agreements, agreements with private sector consultants on behalf of a firm, or agreements with participating intermediary organizations.

 

Section 545.340  Development Corporations  

 

a)         Purpose – Per Section 3510(a) of the Act, the Department may provide, subject to available appropriated funds, financial assistance to the State's mature, small, or medium-sized businesses through development corporations that assume a responsibility for the administration of the loan projects for the modernization and installation of advanced technologies.

 

b)         Eligible Applicants – As specified in Section 3510(b) of the Act,  development credit corporations, financial intermediaries, or other entities whose purpose includes financing, promoting, or encouraging commercialization, adoption, or implementation of advanced technologies, processes, or products, as determined by the Department, may participate in this program.

 

c)         Responsibilities of Development Corporations – Per Section 3510(d) of the Act, the Department is authorized to rely upon, and may provide for in the execution of an agreement, the participating lender's or investor's review on behalf of the State and approval of the credit, collateral security, and documentation; determination of eligibility, economic results expected, and the prospects for viability and repayment; the collection and use of fees, premiums, or charges; the organization, servicing, and disbursement of financial assistance; and such other purposes and activities as the Department, in its sole discretion, shall determine to be reasonable, appropriate, and consistent with the purposes of the Act.

 

d)         Forms of Financial Assistance – Development corporation financial assistance may be in the form of direct loans, grants, or purchases of qualified security investments or financial assistance  [20 ILCS 700/3510(b)].

 

e)         Limitations – Financial assistance authorized under this Section shall not exceed 25% of the amount of new, unexpended, actual or anticipated capitalization (i.e., grants or investments, not loans) to be used by the development corporation for:

 

1)         loans or investments to firms to improve the businesses' production systems and work organization that will preserve and create private sector jobs by increasing the firms' long-term competitive viability; and

 

2)         the planning and operation of the development corporation as approved by the Department through its agreement with the development corporation.  Funds for planning and operation shall not exceed 10% of the financial assistance provided by the Department or the amount of new, actual, or anticipated capitalization. [20 ILCS 700/3510(c)]

 

Section 545.350  Manufacturing Extension Program

 

a)         Purpose – The Purpose of the Manufacturing Extension Program is defined at Section 3520(a) of the Act.  The Department may establish, subject to available appropriated funds, a program of statewide manufacturing extension centers serving the geographic needs of the State's manufacturers, whose mission is to assist small or medium-sized manufacturers with technological advancement, for continuous improvement of business practices for these firms to be better positioned to succeed against global competition.

 

b)         Allowable Costs – Per Section 3520(b) of the Act, the Department may provide grants or may provide cost share or reimbursements under this Section to support the operation of manufacturing extension deliverers.

 

c)         Eligible Applicants – Per Section 3520(b), manufacturing extension deliverers can include universities and colleges, regional or sectorial based organizations, technical societies, or other similar groups, including organizations financed through a federal manufacturing extension partnership program.

 

d)         Procedures for establishment of regionally based or functionally based Manufacturing Extension Centers

 

1)         Service Regions:  Regionally based Manufacturing Extension Centers (MECs) must serve a specific geographic region of the State.  Two regions are defined as follows:

 

A)        Chicago Metropolitan Area:

 

i)          Cook County;

 

ii)         DuPage and Kane Counties;

 

iii)        Kendall and Will Counties; and

 

iv)        Lake and McHenry Counties.

 

B)        Remainder of Illinois.

 

2)         Service Specialties – Functionally based Manufacturing Extension Centers must serve a single industry, a limited number of related   industries, or a specific manufacturing function.

 

3)         Application for Financial Assistance – The Department shall issue instructions and formats for the submittal of applications for financial assistance to support MECs. Such applications shall be solicited on a competitive basis within each service specialty or specific region of the State targeted for the creation of a center.  Applications shall include information such as:

 

A)        a description of the related experience of the applicant agency, including a discussion of performance against goals for projects funded by the Department in the past;

 

B)        a description of the qualifications of MEC staff, consultants, firms, and other organizations delivering MEC services;

 

C)        a discussion of the market niches and customers to be targeted, including technological opportunities and the specific needs of the region's industries;

 

D)        a description of MEC services to be provided, including:

 

i)          marketing activities;

 

ii)         educational events;

 

iii)        enrollment of firms for modernization services;

 

iv)        informal and structured assessments;

 

v)         technical services to improve productivity; and

 

vi)        specialized services;

 

E)        a listing of performance objectives, including the number or amount of:

 

i)          companies served;

 

ii)         companies served for the first time;

 

iii)        events;

 

iv)        event attendees;

 

v)         informal assistance;

 

vi)        formal assistance;

 

vii)       categories of formal and informal assistance;

 

viii)      group projects; and

 

ix)        evaluations;

 

F)         an implementation schedule;

 

G)        a proposed line item budget, including a description of matching funds by source and amount; and

 

H)        for federally designated MECs, a copy of the federal operating plan.

 

3)         Application Review Criteria – As required by Section 3520(d) of the Act, in determining which applicants shall be awarded a grant, the Department shall examine:

 

A)        prior compliance with awards programs;

 

B)        the relationship of a proposed project to the State's future economic growth;

 

C)        the qualifications and expertise of organizations undertaking the effort;

 

D)        the applicant's understanding of the requirements and needs of the target groups served;

 

E)        the potential of the applicant's project to provide an economic benefit to the State;

 

F)         the methods engaged to measure and track performance; and

 

G)        the likelihood that the project has a potential for improving the competitiveness of small and mid-sized manufacturers.

 

4)         Renewal of Awards – The Department may renew a grant award for a subsequent year for any MEC judged to be meeting performance objectives during the current grant performance period.  In making determinations regarding the renewal of grant awards, the Department shall consider evaluative criteria, including but not limited to the number or amount of:

 

A)        companies served;

 

B)        companies served for the first time;

 

C)        events;

 

D)        event attendees;

 

E)        informal assistance;

 

F)         formal assistance;

 

G)        categories of formal and informal assistance;

 

H)        group projects; and

 

I)         evaluations.

 

e)         Professional Development – Per Section 3520(c) of the Act, the Department may provide grant funds made available under the Act to support professional development and capacity building of the manufacturing extension system within the State as may be required for the administration, operations, research, analysis, promotion, or training of geographic based manufacturing extension centers.

 

Section 545.360  Manufacturing and Export Base Services Program

 

a)         Purpose – Per Section 3525(a) of the Act, the Department may, subject to available appropriated funds, establish a program of statewide assistance to the manufacturing and services export base of the State serving the sector-wide needs of small and medium-sized companies.

 

b)         Allowable Activities – Per Section 3525(b) of the Act, the Department may provide grants, cost share funds, or reimbursements:

 

1)         to State or substate programs providing better access to information;

 

2)         to reduce the impediments to the flow of technical information; and

 

3)         to provide Illinois manufacturers, producer firms, and export services firms with better or more timely access to the State's and the nation's technology base, including industrial and engineering consulting practices, university and research laboratory based engineers, private commercial product vendors, and other sources of technology or non-technology services.

 

c)         Eligible Applicants – Per Section 3525(d) of the Act, the Department may seek out applicants that may be considered for a grant, and may provide an award based on the qualifications and expertise of organizations undertaking the effort, the applicants understanding of the requirements and needs of the target groups served, and the likelihood that the proposed project will improve the State's future economic potential.

 

d)         Role of Intermediaries – Per Section 3525(c), the Department may provide grants to those private, public, and non-profit research institutions and organizations that agree to serve as an intermediary to achieve the purpose set forth in this Section that continues to ensure Illinois' economic vitality and competitiveness.

SUBPART E: DIRECT GRANT, INVESTMENT, AND LOAN APPLICATION PROCEDURES

 

Section 545.410  Methods of Direct Grant, Investment, and Loan Application Submittal

 

This Subpart describes procedures used by the Department and/or by intermediary organizations making direct grants, loans, or investments in support of advanced technology or business projects.  This Subpart does not pertain to portfolio investments. For a discussion of procedures relating to portfolio investments by the Department, see Section 545.230 of this Part.  When making direct grants, loans, or investments in support of advanced technology or business projects, the Department and/or intermediary organizations shall supply potential applicants with applications upon request, provided that funds are available for the program.  Representatives of the Department and/or intermediary organizations may provide assistance to businesses in completing applications when requested.  The Department may solicit or accept applications for grants, investments, and/or loans authorized under this Part through one of the following means.

 

a)         Competitive Request for Applications – The Department may periodically issue competitive requests for applications from eligible applicants.

 

b)         Unsolicited Applications – The Department may accept applications for grants, investments, and/or loans from eligible applicants on an ongoing basis, provided that funds are available for the program.

 

c)         Applications Submitted by Intermediaries – The Department may accept an application, submitted on behalf of an eligible applicant, from an intermediary organization.  At the same time such an application is submitted to the Department, the intermediary organization shall also submit its evaluation of the application, completed pursuant to the requirements of Sections 545.440 and 545.450 of this Part.  The Department shall subsequently complete its review independently, taking into account the recommendations and findings of the intermediary organization.  The final decision to award financial assistance in response to such applications shall be made by the Director.

 

d)         Delegation to Intermediaries – The Department may, pursuant to an agreement between the Department and the intermediary organization, delegate responsibility to the intermediary organization to accept and evaluate applications from Illinois companies for grants, investments, and/or loans authorized under this Part and make such grants, investments, and/or loans on behalf of the Department.

 

e)         Coordinated Economic Development Applications – The Department may solicit an application from an eligible applicant as part of a package of economic development services and/or incentives for the purpose of soliciting a business project to retain or expand employment within Illinois.  Such solicitation may be made if the resultant project is consistent with the purpose of the Act and will have a significant positive effect on Illinois' competitive economic position.

 

Section 545.420  Application Content

 

The Department shall issue instructions and formats for the submittal of applications for financial assistance, customized to the requirements of the various programs described in this Part.  Applications shall include the following information.

 

a)         Applicant Information – The application shall include sufficient information to demonstrate that the applicant is eligible to apply for financial assistance pursuant to the requirements of the Act and this Part.

 

b)         Project Information – The application shall contain sufficient information to clearly explain the nature and potential benefits of the proposed project.  The application will generally follow a business plan format and, as applicable to the type of program, include sections such as:

 

1)         executive summary;

 

2)         description of the applicant (e.g., company or sponsoring organization);

 

3)         description of the technologies, innovations, products, processes, systems, or devices to be developed or improved;

 

4)         marketing information relevant to the proposed project;

 

5)         description of the expected benefits to the company;

 

6)         description of the expected public benefits to Illinois;

 

7)         line item budget for use of the requested financial assistance;

 

8)         description of the operating structure of the project, including a description of company ownership, management, and the qualifications of key project personnel;

 

9)         actual and pro forma financial statements;

 

10)         schedule of project activities and key milestones;

 

11)         justification of need for a State funded grant, investment, or loan; and

 

12)         description of leveraged funding, including letters of commitment from other investors.

 

Section 545.430  Screening of Applications

 

The Department and/or an intermediary organization and/or a designee shall screen applications to determine that all application requirements have been addressed. Except in the case of applications submitted in accordance with Section 545.410(a), Competitive Requests for Applications, applicants will be notified of deficiencies in applications and given a minimum of one opportunity to correct such deficiencies through resubmission.

 

Section 545.440  General Review Criteria  

 

Complete applications shall be reviewed and evaluated by the Department or a designee and, if submitted by an intermediary organization on behalf of an eligible applicant, by the intermediary organization.  To make this determination, the Department and/or an intermediary organization shall conduct an evaluation of each application, including the following components:

 

a)         Consistency with Statutory Intent – The applicant shall demonstrate that the proposed project is consistent with a purpose for which financial assistance may be provided pursuant to the requirements of this Part.

 

b)         Ability to Implement the Project – The applicant shall demonstrate the ability to implement the proposed project, including, if appropriate:

 

1)         identification of loans, investments, or grant share from all lenders and investors on letterhead, signed and dated;

 

2)         presentation of a project implementation schedule that demonstrates the applicant's readiness for immediate project initiation; and

 

3)         provision of written cost estimates from contractors, suppliers, and architects that support project costs.

 

c)         Financial Feasibility – The Department, its designee, and/or an intermediary organization shall review the applicant's financial statements, including projected statements, and related information to determine the financial viability of the project.

 

d)         Market Feasibility – The applicant must demonstrate the market feasibility of the project, including, if applicable, a description of the potential users of the products or service; an analysis of the size of the potential market; the anticipated market share; and the competitive advantage the project has over existing similar products or services currently competing in the target market.

 

e)         Technical Feasibility – The Department and/or an intermediary organization may require applicants to undergo a technical feasibility analysis conducted by individuals or organizations that possess the expertise to evaluate selected technological aspects of an application.  Such individuals shall have the requisite expertise to conduct such analyses, as evidenced by academic and professional credentials in the subject matter of the proposed project.

 

f)         Competence of Personnel – The applicant must demonstrate that key managers and project staff have appropriate knowledge and experience in related fields.

 

g)         Private Investment and Owner Equity – The applicant shall demonstrate that other financing with respect to the project is provided.  The owner's equity to be contributed, which shall be a significant part of the business project funding, shall be verified as available and/or committed to the project.

 

h)         Past Performance – The Department, its designee, and/or an intermediary organization shall evaluate the performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

 

Section 545.450  Program Specific Criteria

 

a)         Technology Challenge Grant Program – Pursuant to the requirements of Section 2003 of the Act, applications determined by the Department to be complete shall be forwarded to the Illinois Coalition for their review and evaluation.

 

1)         The Illinois Coalition shall consider the following criteria in determining recommendations to the Department:

 

A)        the relationship of a proposed advanced technology project to the State's future economic growth;

 

B)        the potential for adapting, commercializing or adopting the results of the applicant's project for the economic benefit of the State; and

 

C)        the likelihood that the project has a potential for creating new jobs or retaining current jobs in the State. [20 ILCS 700/2003(a)]

 

2)         The Department shall consider the recommendations of the Illinois Coalition and the following criteria in determining grant awards:

 

A)        the qualifications and expertise of consultants, firms or organizations undertaking the effort;

 

B)        the potential for leveraging federal or private research dollars, or both, for the initiative; and

 

C)        the extent of the capacity of the applicant or the applicant partnership or consortium to finance the initiative. [20 ILCS 700/2003(a)]

 

b)         Illinois Technology Enterprise Development and Investment Program – The Department shall determine the viability of matching funds. Per Section 3004(a) of the Act, in determining if direct qualified security investments or loans are to be made, the Department shall find that:

 

1)         there is a likelihood of commercial feasibility given the state of development of the proposed product, process, service, or technical device; and

 

2)         that there is a likelihood of increased job opportunities in the near term as a result of the security investment.

 

c)         Modernization Retooling Loan Program – Per Section 3004(b) of the Act, in determining if a loan is to be provided, the Department shall determine whether there will be an expected improvement in production levels, quality of output, or timeliness of delivery and that the number of jobs to be created or retained is reasonable in relation to the loan funds requested.  The applicant shall also demonstrate that the project will involve the purchase of advanced technology and other expenditures integral to technological improvement.  The applicant shall demonstrate that the project will have a public benefit of providing a net increase or net retention of jobs for Illinois citizens and the project will have a private benefit of improving productivity, effectiveness, or efficiency of the firm's production activities or will increase revenues or reduce expenses.

 

d)         Modernization Grants Program – Per Section 3515(c) of the Act, the applicant shall demonstrate the level of expertise of the consultant or firm undertaking the competitiveness assessment or productivity improvement services.  The applicant shall further demonstrate that the project will result in a substantial improvement in the applicant's operations and will result in the creation or retention of jobs.

SUBPART F: HOMELAND SECURITY PROGRAM

 

Section 545.510  Purpose

 

In accordance with the general intent of Section 2001 of the Act [20 ILCS 700/2001] the Homeland Security Market Development Program is intended to support the development and/or application of homeland security-related products or services, conditioned upon these products or services addressing demonstrated needs in homeland security and/or defense.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.520  Authorized Programs and Activities

 

The Homeland Security Market Development Program may be used for activities generally consistent with the intent of Section 2002 of the Act, such as providing investments, loans, or grants to individual businesses, partnerships or joint ventures that provide or commercialize products or services that meet homeland security or defense needs. Further, financial assistance may be used to fund not-for-profit or educational institutions that  make available resources and expertise that further homeland security preparedness, recovery, planning, or service delivery; support development of the technical or managerial skills for business owners and entrepreneurs; aid commercial ventures in locating financing product or service development; and help new companies or partnerships with product development.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.530  Eligible Applicants

 

The Department may provide an award of grant funds, make a loan to, or provide an investment in any entity, partnership, or joint venture located, or with substantial operations, in the State of Illinois. Financial assistance will be awarded based on the qualifications and expertise of the entity and the ability of the entity to demonstrate a sufficient need for its proposed project.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.540  Eligible Costs

 

Grant, loan or investment funds may be used toward the development, production, or commercialization of any product or service with application in both homeland security and another commercial sector. Financial assistance may be used to hire technical staff, to engage third-party consultants and professional service providers, or for other uses as the Department deems appropriate in order to assist with homeland security product or service development, the support of programs that contribute to product or service development, or activities that accelerate commercial application of the product or service.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.550  Ineligible Costs

 

Grant, loan or investment funds are not intended to finance long-term research projects. They are intended to accelerate the development and production of homeland security products.  Funds may not be used for general or routine administrative purposes.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)

 

Section 545.560  Reporting Requirements

 

Unless otherwise specified in the agreement between the Department and the recipient, an entity receiving financial assistance shall report financial and programmatic data to the Department on a regular basis using formats provided by the Department. Report formats and content shall be customized to the specific program and form of financial assistance. The Department requires quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

 

a)         Expenditures – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall report actual expenditure of financial assistance using expenditure formats supplied by the Department.  Expenditure summaries are to be submitted to the Department by the 15^th day following the end of each fiscal quarter in which any expenditure of financial assistance is made. All award dollars must be expended within 24-months after receipt. Failure to do so may trigger the Department to initiate fund recovery activities.

 

b)         Program Report – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall submit a program report in a format provided by the Department. The program report shall include a narrative describing the entity's progress toward achievement of objectives and activities as specified in the agreement with the Department or an intermediary organization.  Program reports shall be submitted to the Department by the 15^th day following the end of each fiscal quarter.

 

(Source:  Added at 30 Ill. Reg. 8450, effective April 19, 2006)