If you’re new in business, we don’t have to remind you that securing investment is the name of the game. Luckily for our Illinois-based small business clients, there’s a helpful tax credit program, which you might qualify for, that makes investing in early-stage, innovative companies advantageous for investors.
The impact for you (if your company fits the criteria)? When investment is incentivized, it’s easier to secure capital.
Not bad for businesses and investors alike — and then, the market thrives.
Today, we’re providing an easy-to-understand rundown of the stipulations of that program — the Illinois Angel Investment Credit Program — so you can see if your business qualifies as an investment candidate.
First, a quick summary of how the program works.
The Angel Program offers a total of $10 million in tax credits annually (on a first come, first serve basis) to investors funding early-stage, innovative companies that qualify for new business venture status in Illinois. Investors receive a 25% tax credit on the total dollar amount invested.
For example: if an investment firm decides to invest $100,000 in your business, it’d receive a $25,000 tax credit, assuming your business qualifies under the below principles.
For investors, the tax credit cannot exceed the taxpayer’s Illinois income tax liability. If you can’t use your entire credit in the current year, have no worry, you may carry it forward up to 5 years. Also, the maximum amount of an investment that may be used toward the credit is $2,000,000, per investment. There are other rules that investors must follow – see Illinois Investors
Exciting, no? Let’s get to the good stuff: the criteria for qualifying as a business seeking capital.
In order to qualify for new business venture status with the Illinois Angel Investment Credit Program, you must:
- Run a business centered around innovation.
- Have fewer than 100 employees when the application is filed.
- Have a company with at least 51% of its employees located in Illinois.
- Be headquartered in Illinois.
- Have been in operation in Illinois for less than 10 consecutive years.
- Have the potential to create jobs or capital investments, or both.
- Have not received more than $10 million in aggregate private equity investments, or $4 million in investments that qualified for tax credits.
- Be registered with the Illinois Secretary of State’s Office to transact business in Illinois.
If your company fits the above criteria, consider opening yourself up to opportunity by applying as a new business venture.
Investors, if you would like to learn more about the requirements that you must adhere, access more information, including the application, by clicking here.
All information obtained from the Illinois Department of Commerce website.