The Maine Seed Capital Tax Credit Program is designed to encourage equity investments in Maine businesses, directly and through private venture capital funds. FAME may authorize state income tax credits to investors for up to 50% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
- Businesses located in Maine.
- Investor must own less than 50% of the business.
- Principal owners and their immediate relatives are not eligible.
- Annual gross sales of less than $5,000,000.
- Business must either:
- be a manufacturer;
- provide goods or services with 60% of sales derived from outside the state or to out-of-state residents;
- develop or apply advanced technologies;
- be a value-added natural resource enterprise; or
- be certified as a visual media production company.
- Operating the business must be the professional, full-time activity of at least one of the principal owners.
Amount of credits available each year are limited, as follows:
- Investment year 2016 and beyond – total credits available: $5,000,000.
If you have any questions, including whether credits remain available for any year, please contact Charlie Emmons, Director of Commercial Lending/Program Manager, by email or by phone at (207) 620-3510.
- Tax credits equal to 50% of the investment.
- An investor may provide up to $500,000 per business.
- Aggregate investment limit per business is $5,000,000 for which tax credit may be received.
- Investments must be at risk for five 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.
- Credits must be taken in increments of 25% (of the credit) per year starting in the year of the investment. For investment not made through private venture capital funds, credits used cannot exceed 50% of the total tax due by the investor for that taxable year before application of the tax credit, and to the extent this limitation requires the taxpayer to take the credit over more than four years, unused credits may be carried forward no more than 15 years. For private venture capital funds, credits are refundable.
Special Rules for Private Venture Capital Funds
- Investors may provide up to $500,000 per business, including through a private venture capital fund, in any consecutive three-year period.
- No one company can receive investments of more than $5,000,000 qualifying for credits, including investments through a private venture capital fund, but may receive more without credits.
- Private venture capital funds may not own more than 50% of a company receiving investments.
- No member of the private venture capital fund may be a principal owner.
- Business receiving investment from private venture capital fund must keep operations in-state for four years following investment.
- Investment into private venture capital funds must be at risk and principal may not be paid without FAME consent for five 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.
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.
A business must apply for eligibility prior to receiving investments for tax credits. If the business has more than ten (10) employees, the Employment Plan must be included with the Business Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
Submit the Individual Investor Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
Private Venture Capital Funds
Submit the Private Venture Fund Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
The appropriate application and all supporting documents referenced within it must be completed and returned to FAME in order to complete the application process:
- Maine Seed Capital Tax Credit Private Venture Fund Application
- Maine Seed Capital Tax Credit Individual Investor Application
- Maine Seed Capital Tax Credit Business Application
- Employment Plan
For best results, please download .pdf forms locally, then open and complete them with Adobe Acrobat. If you don’t have Acrobat, you can download a free version of Adobe Acrobat Reader here. Save and print your completed forms, then mail to FAME.
The Maine Office of Securities provides industry information and resources. In addition to fielding consumer complaints, the office also welcomes questions about investments, financial professionals, and securities laws. MOS also protects Maine investors by licensing broker-dealers, agents, investment advisers, and investment adviser representatives; reviewing registration statements and exemption filings for securities issuers that are seeking to sell in Maine; and investigating and prosecuting violations of the securities laws.