Chattanooga to offer direct incentives to small businesses

Chattanooga to offer direct incentives to small businesses

May 9th, 2014 by Mike Pare in Business Around the Region

Chattanooga Mayor Andy Berke

Photo by Tim Barber /Times Free Press.

Paying small businesses to add new employees is one way to help those companies grow and potentially expand to medium- or large-sized firms, Chattanooga Mayor Andy Berke said Thursday.

"Any study will tell you it's fantastic to bring in large companies ... but in the long run we have to grow our own," he said in unveiling a new effort aimed at providing an incentive for small businesses to expand.

Berke said if companies add five or more full-time employees, the business will receive a $500 per worker credit.

"We needed to figure out some way to incent people who are coming here to expand here and grow here," the mayor said as he rolled out the Grow Small Businesses initiative at a Chattanooga Area Chamber of Commerce roundtable meeting with more than a dozen company owners.

Berke said businesses must have 100 employees or less to quality for the program, that's to start July 1.

He said plans are to provide a yet-unspecified amount of money into the city budget for the effort. Qualified workers must work for a year before the company receives the direct incentive, Berke said.

Also, the business will need to pay the employees a figure that's standard for the occupation, he said.

The mayor said the city doesn't have a jobs goal in mind with the initiative. He said it's not necessarily targeted at technology companies, though there's "a tech ecosystem building."

"It's simply to increase the numbers," he said. "As we evaluate it at the end of year one, we'll see what we can do to make it more successful."

Jonathan Bragdon, chief business officer for the firm Variable, said the effort is not necessarily a draw to a small business by itself, but works as part of a list of factors to create a better culture for companies looking at Chattanooga.

"It helps make them take the risks," he said.

Nivau Patel, chief executive of Rapid RMS, said the initiative will encourage companies to grow in Chattanooga, and it's something his business will look at.

Berke said the idea grew out of discussions he had with people who would remark to him about large businesses investing in the area, but wondering what the city is doing to attract small companies.

"Our commitment is to people who really make our city hum and buzz," he said.

The mayor said the city is trying to become a more active partner with the Chamber when it comes to economic development.

"We've supported [payment in lieu of tax agreements] or incentives, but there's not been that kind of forceful day-to-day partnership," he said.

Berke also cited other economic development efforts started over the past year, such as repurposing the Enterprise Center and hiking the percent of minority and women-owned companies doing business with the city from 1 percent to 7.2 percent.

Contact Mike Pare at or 423-757-6318.