This program is designed to encourage equity and near equity investments in young business ventures, directly and through private venture capital funds. FAME may authorize State income tax credits to investors for up to 60% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
Eligibility
- Businesses located in Maine.
- Investors must own less than an aggregate of 50% of the business.
- Principal owners and their immediate relatives are not eligible.
- Annual gross sales of less than $3 million.
- Business must either: 1) be a manufacturer; 2) provide goods or services with 60% of sales derived from outside the State or to out-of-state residents; 3) develop or apply advanced technologies; 4) bring significant permanent capital into the State.
- Must be the professional, full-time activity of at least one of the principal owners.
Basic Terms
- Tax credits equal to 40% of the investment - 60% for investments made in businesses located in high unemployment areas.
- An investor may provide up to $500,000 per business.
- Aggregate investment limit per business is $5 million for which tax credit may be received.
- Investments must be at risk for 5 years.
- Credits must be taken in increments of 25% (of the credit) per year for the 4 years following the investment. Credits used cannot exceed 50% of the total tax due by the investor for that taxable year before application of the tax credit. To the extent this limitation requires the taxpayer to take the credit over more than 4 years, unused credits may be carried forward no more then 15 years.
- For a more thorough description of the Program and any limitations thereon, refer to Chapter 307 of the FAME Rule.
Special rules for venture capital funds
- Investors may provide up to $1,000,000 per venture capital fund in any consecutive 3-year period.
- Investors in any one venture capital fund cannot receive more than $5,000,000 in credits, but may invest more without credit.
- Investors in certain qualifying venture capital funds may receive one half of this credit (up to 20%) at the time of investment.
- The remaining amount of an investor's tax credit will be awarded when and if the venture capital fund invests sufficient monies in an eligible Maine business. Credits will be revoked if not substantiated within 3 years.
- Investment into venture capital funds must be at risk and principal may not be paid without FAME consent for 5 years. Dividends, royalties, interest, stock options or warrants and other forms of return, which are not in the nature of return of principal, are allowed.
Reporting Requirements
- Businesses receiving investments for which credits are issued, must file annual reports with information on the total investments received, number of employees and jobs created/retained, annual payroll and total sales revenue. Failure to file reports will result in ineligibility and possible revocation of credits issued in the reporting period (the prior year).
Fees
- $250 per business (one time fee).
- $100 per investor, per investment.
- $250 per venture capital fund.
Application
Click
here to view application.
The applications above can be viewed using Adobe Acrobat. You may download a free copy of Adobe Acrobat Reader by clicking
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Contact
207- 623-3263
1-800-228-3734
FAX: 207-623-0095
TTY: 207-626-2717
