Loan & Tax Credit Programs
The Kentucky Economic Development Finance Authority offers a variety of attractive loan and tax credit programs; generally non-retail fixed asset financing:
- Industrial Revenue Bonds can be issued by state and local governments in Kentucky to be used to finance manufacturing projects and their warehousing areas, major transportation and communication facilities, most health care facilities, and mineral extraction and processing projects.
- The Bluegrass State Skills Grant Program assists and promotes industry specific training efforts and employment opportunities for Kentucky residents.
- The Bluegrass State Skills Training Investment Credit aids existing companies in their efforts to develop a skilled workforce. This program allows companies to recover up to 50% of their approved costs for occupational and skills upgrade training costs through a corporate income tax credit.
- The Commonwealth Seed Fund (CSC) provides early-stage seed funds to facilitate the commercialization of innovative ideas and technologies developed in Kentucky. The CSC will invest its capital in private venture capital funds that commit to invest at least three times the amount of capital invested in it by the CSC in Kentucky technology companies.
- The Direct Loan Program provides low-interest loans ranging from $25,000 to $500,000. The loan amount is based on project fixed asset cost for land, buildings, and equipment. These loans are for nonretail industrial, service industry, agribusiness, and tourism projects. No retail projects are eligible.
- The Incentives for Energy Independence Act (IEIA) provides incentives to companies, which produce energy-efficient alternative fuels, using biomass, oil shale, tar sands, coal, natural gas, or natural gas liquids as the primary feedstock, or that produce a homogeneous fuel. Renewable energy facilities also qualify that meet the minimum electrical output for wind, hydro, biomass, landfill methane, and solar. The negotiated incentives may include a reimbursement of sales and use taxes, a tax credit of the income tax and limited liability entity tax owed by the company, and wage assessment incentives of each employee whose job was created as part of the project.
- The Kentucky BusinessInvestment (KBI) program provides one new flexible, consolidated program for new and expanding industries. The KBI program provides income tax credits and wage assessments to new and existing agribusinesses, regional and national headquarters, manufacturing companies, and nonretail service or technology-related companies that locate or expand operations in Kentucky. Qualifying businesses are required to create a minimum of 10 new, full-time jobs for Kentucky residents, incur eligible costs of at least $100,000, and compensate at least 90% of the new, full-time Kentucky resident employees a base hourly wage of at least $10.88 (150% of the federal minimum wage).
- The Kentucky Enterprise Initiative Act (KEIA) provides sales tax refunds to any business entity involved in a new or expanded service, technology, manufacturing, or tourism attraction activity in Kentucky. This program allows companies to receive sales tax refunds for the purchase of electronic processing equipment costing at least $50,000. The project must involve a minimum investment of $500,000.
- The Kentucky Environmental Stewardship Act (KESA) provides tax incentives to any business entity that manufactures a unique product that has a substantial positive impact on the environment and has at least $5 million in eligible costs. The business can potentially recover up to 25% of the project’s fixed asset cost and 100% of employee skills training.
- The Kentucky Industrial Revitalization Act (KIRA) provides tax incentives to manufacturing operations that are in imminent danger of permanently closing or that have closed temporarily and retain or create 25 jobs.
- The Kentucky Investment Fund Act (KIFA) offers a 40% tax credit to certain personal and corporate investors, such as angel, seed, and venture capital, in approved investment funds.
- The Kentucky Reinvestment Act (KRA) assists existing manufacturers who need to make significant capital investments in order to remain competitive. This program requires a minimum of $2.5 million in new investment.
- The Kentucky Tourism Tax Credit allows qualified projects to be eligible for a sales tax credit against sales tax generated by visitors to the attraction. The attraction may recover up to 25% of the project’s development costs through this credit over a 10-year period.
- The Small Business Innovation Research (SBIR) incentive program encourages small businesses to explore their technological potential and maximize profit from commercialization. This program matches federal awards received by Kentucky businesses to support exploration of the technical merit or feasibility of an idea or technology and full-scale research and development.
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