Arizona Small Business Opportunity Program
Arizona Small Business Opportunity Program
Arizona Small Business Opportunity Program
Arizona Technology Council Announces Passing of SB 1335 -Small Business Opportunity Program- Legislation
May 20, 2005--The Arizona Technology Council announces that Governor Janet Napolitano has signed the SB 1335 (Small Business Opportunity Program) legislation. This is a "key win" for the tech industry in the state of Arizona. Program details are as follows:
Arizona Small Business Opportunity Program
SB 1335: Small Business Investments
Arizona Small Business Opportunity Program
Purpose -- to expand early stage investment in Arizona's small businesses.
Background -- Small businesses comprise more than 80% of Arizona's economy. Assisting small businesses as they grow, particularly those well positioned to create high-wage jobs, is critical to Arizona's economic growth.
A significant area of need for small businesses is access to "early-stage" equity capital when building their operations. This is so because they are too small to secure adequate financing through bank loans and other traditional sources of capital, or enter the stock market as a publicly traded company.
Private equity investments by individuals and specialized "angel" funds and venture capital firms can be used by small businesses to gain access to these resources. Yet, as the economy boomed in the latter half of the decade and "early stage" and "venture" capital investments soared nationwide, Arizona fell behind.
Arizona cannot afford to lose its knowledge-based small businesses to other states. The critical shortage of equity capital for new businesses in Arizona represents a serious shortcoming and, as a result, small, homegrown businesses face difficulties in expanding operations and taking new ideas, products and services to market.
Description of Program -- A state tax credit is made available to investors who invest in early-stage "qualified small businesses." The credit is 30% of the investment, increasing to 35% for investments in bioscience companies and companies located in rural Arizona.
The credit may be offset against Arizona taxable income in equal amounts over a 3-year period. The credits are not transferable.
A "qualified investment" must be an equity investment in a minimum amount of 25K per investment and each investor is limited to a maximum of 250K in investments in all qualified small businesses eligible for the credit per year. Credits are not available to persons who already hold 30% or more of the equity of a qualified small business.
A "qualified small business" must:
(1) have at least a portion of its operations in Arizona;
(2) have at least two full-time employees or full-time independent contractors in Arizona;
(3) not have a principal business in retail, restaurants, real estate, professional services, personal services or health care services;
(4) have total assets less than $2 million; and
(5) have received not more than $2 million in investments eligible for the credit.
The total tax credits are capped at $20 million over a 5-year period with no general fund impact in fiscal year 2006. Credits will be available to investors on a first-come, first-serve basis starting July 1, 2006.
"The Council believed strongly that we could not be complacent about the need for capital for our emerging tech companies," said Todd Bankofier, president and CEO of the Arizona Technology Council. "To build a knowledge-based economy will require, among other things, a commitment to investing in start-up companies. The Council p Contacts
Arizona Technology Council, Tempe
Tonya Emrick, 602-343-8324, ext. 107 (Public Relations)
temrick @ aztechcouncil.org
Todd Bankofier, 480-688-4579
Arizona SB 1335 - Small Business Opportunity
Arizona Small Business Opportunity Program
Arizona Technology Council Announces Passing of SB 1335 -Small Business Opportunity Program- Legislation
May 20, 2005--The Arizona Technology Council announces that Governor Janet Napolitano has signed the SB 1335 (Small Business Opportunity Program) legislation. This is a "key win" for the tech industry in the state of Arizona. Program details are as follows:
Arizona Small Business Opportunity Program
SB 1335: Small Business Investments
Arizona Small Business Opportunity Program
Purpose -- to expand early stage investment in Arizona's small businesses.
Background -- Small businesses comprise more than 80% of Arizona's economy. Assisting small businesses as they grow, particularly those well positioned to create high-wage jobs, is critical to Arizona's economic growth.
A significant area of need for small businesses is access to "early-stage" equity capital when building their operations. This is so because they are too small to secure adequate financing through bank loans and other traditional sources of capital, or enter the stock market as a publicly traded company.
Private equity investments by individuals and specialized "angel" funds and venture capital firms can be used by small businesses to gain access to these resources. Yet, as the economy boomed in the latter half of the decade and "early stage" and "venture" capital investments soared nationwide, Arizona fell behind.
Arizona cannot afford to lose its knowledge-based small businesses to other states. The critical shortage of equity capital for new businesses in Arizona represents a serious shortcoming and, as a result, small, homegrown businesses face difficulties in expanding operations and taking new ideas, products and services to market.
Description of Program -- A state tax credit is made available to investors who invest in early-stage "qualified small businesses." The credit is 30% of the investment, increasing to 35% for investments in bioscience companies and companies located in rural Arizona.
The credit may be offset against Arizona taxable income in equal amounts over a 3-year period. The credits are not transferable.
A "qualified investment" must be an equity investment in a minimum amount of 25K per investment and each investor is limited to a maximum of 250K in investments in all qualified small businesses eligible for the credit per year. Credits are not available to persons who already hold 30% or more of the equity of a qualified small business.
A "qualified small business" must:
(1) have at least a portion of its operations in Arizona;
(2) have at least two full-time employees or full-time independent contractors in Arizona;
(3) not have a principal business in retail, restaurants, real estate, professional services, personal services or health care services;
(4) have total assets less than $2 million; and
(5) have received not more than $2 million in investments eligible for the credit.
The total tax credits are capped at $20 million over a 5-year period with no general fund impact in fiscal year 2006. Credits will be available to investors on a first-come, first-serve basis starting July 1, 2006.
"The Council believed strongly that we could not be complacent about the need for capital for our emerging tech companies," said Todd Bankofier, president and CEO of the Arizona Technology Council. "To build a knowledge-based economy will require, among other things, a commitment to investing in start-up companies. The Council p Contacts
Arizona Technology Council, Tempe
Tonya Emrick, 602-343-8324, ext. 107 (Public Relations)
temrick @ aztechcouncil.org
Todd Bankofier, 480-688-4579
Arizona SB 1335 - Small Business Opportunity
