How can the Maine Seed Capital Tax Credit Program be used to assist startups and businesses and what is the general eligibility?
The Maine Seed Capital Tax Credit Program is designed to encourage equity investments in Maine businesses, directly and through individual investments and private venture capital funds. FAME may authorize state income tax credits to investors for 40% of the cash equity provided to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
The Maine Seed Capital Tax Credit Program has recently been expanded from $5M to $15M. What additional important changes have been made to the program?
Under newly enacted law (PL 2020, Ch. 616), tax credit authority for 2020 was expanded from $5 million dollars to $15 million for the calendar year. Having already awarded $5 million in credits on January 2, 2020, FAME now has the authority to issue up to $10 million in tax credits under the program for eligible investments made in eligible companies ON OR AFTER April 1, 2020. Investments made prior to April 1, 2020 are not eligible, and credits already issued in 2020 for investments made on or about January 2, 2020 will not be adjusted.
The new legislation made additional program changes, effective April 1, 2020:
- Credits are now authorized at 40% (down from 50%) of eligible investment;
- The maximum cumulative qualified investment in each company was reduced to $3.5 million dollars (down from $5 million).
- There is now a limit of qualified investment in any one company in any one year of $2 million dollars.
The limits set forth in #2 and #3 above will be applied commencing with applications received on or after April 1, 2020, and will count all investments already made in companies, both cumulatively and earlier in 2020.
Why is this tax credit program important for startups and entrepreneurs in the fundraising process?
The Maine Seed Capital Tax Credit Program allows businesses to attract investment companies through incentivizing them with the tax credit program. Investors may be more apt to invest given the benefits of the Maine Seed Capital Tax Credit Program. Startup enterprises and entrepreneurship is a vital component to success of the economic climate in Maine.
What type of COVID-19 relief loan programs is FAME currently deploying?
COVID-19 Lender Insurance Program: provides commercial loan insurance of 50-75% to lenders who make loans to Maine businesses experiencing interruption or hardship due to COVID-19.
COVID-19 Interim SBA Finance Loan Program: provides FAME Direct Loans of up to $100,000 with special terms available to eligible borrowers who provide proof of commitment for SBA financing.
COVID -19 Business Direct Loan Program: provides FAME Direct Loans of up to $50,000 with special terms available to Maine-based businesses experiencing interruption or hardship due to COVID-19.
You’ll be presenting at CMGC’s Tech Talk for May’s virtual Central Maine Tech Night. Can you give us a preview of what you’ll be discussing?
We will provide an in-depth look at the qualifications and benefits for the Maine Seed Capital Tax Credit Program and will discuss our current programs offered due to the COVID-19 pandemic, including: COVID-19 Lender Insurance Program,
COVID-19 Interim SBA Finance Loan Program, and COVID -19 Business Direct Loan Program.
Last modified: June 18, 2021