Expanding support for greater Minnesota small businesses
Small business owners across Minnesota rely on outside investors to support the growth and sustainability of their companies. Currently, our state offers a small business investment tax credit, more commonly known as the Angel Investment Tax Credit, to draw investors to qualifying small businesses. Investors may claim the tax credit on 25% of the investments made in a qualified small business. About $12 million per year is appropriated for this credit.
However, recent studies from the Department of Employment and Economic Development (DEED) indicate that money from these investment tax credits has not been proportionally distributed between the Twin Cities metro area and greater Minnesota.
To address this issue, two bi-partisan bills enhancing the tax credit for investors supporting qualified greater Minnesota small businesses were recently heard in the Jobs, Agriculture Rural Development committee. This legislation would establish an additional 25% credit to investors willing to invest money into qualified greater Minnesota businesses. Furthermore, the legislation would extend the tax credit program and increase the amount available in the fund.
There are of course specific requirements determining which small businesses qualify for the Angel Investment Tax Credit. These include businesses headquartered in Minnesota with fewer than 25 employees, with at least 51% of workers and total payroll also based in the state. Also, employees must be paid at least 175% of federal poverty guidelines ($40,338 for 2012) and interns 175% of the federal minimum wage ($12.69/hour).
Aside from these more technical qualifications, the program requires that businesses receiving investments must be engaged in or committed to engaging in technological innovation in Minnesota. This requirement is important to understanding the need for the enhanced tax credit for greater Minnesota small businesses.
For instance, small businesses in our communities who pursue new technologies for agriculture, tourism, manufacturing or transportation would fall within the scope of the 25% investment credit. However, there is nothing currently drawing investors down to our small businesses when there is a comparable company in the metro area. The proposed investment tax credit would help bring more small business investments to our communities thereby making our local economy stronger and more competitive.
I am encouraged by the bi-partisan work already being done on these bills. Supporting small businesses in greater Minnesota communities is important to the state’s whole economy and I look forward to moving this legislation forward.
If you have any questions regarding the small business investment tax credit feel free to contact my office via email: email@example.com or by phone: (651) 296-9248. You can also learn more by visiting the DEED website at www.positivelyminnesota.com/business. As always, I welcome your comments and questions.