Low-Cost Loans

Another form of fiscal incentive is a low-cost loan program. Such programs may be used to encourage businesses to locate in a designated urban renewal area. Small loan programs can also be used to close the gap between vacant properties and more traditional development projects. In this regard, sometimes the costs of rehabilitation (which might include, for example, environmental remediation) along with pre-existing encumbrances (such as tax liens) exceed the market value of these properties. Local government (or a public sector-affiliated financial institution) can offer low-interest loans to encourage rehabilitation of vacant sites or blighted buildings.