HB40 Summary

• Establishes the Early Stage Investment Act to provide a refundable income and corporate franchise tax credit for qualified investors who invest in Alabama entrepreneurial businesses.

• Defines eligible businesses as those domiciled in Alabama with 20 or fewer employees, less than $500,000 in annual revenue, less than $1,000,000 in total funding, in operation for fewer than 3 years, and not in excluded industries (accounting, medical, legal, banking, real estate, construction, insurance, oil and gas, or gambling).

• Provides tax credits equal to 50% of the amount invested, divided equally over 5 taxable years, with a maximum of $100,000 per year per business and an aggregate annual cap of $10,000,000.

• Requires investors to make at-risk investments, prohibits principal owners from qualifying, and restricts use of proceeds to capital improvements, equipment, research and development, and working capital.

• Tax credits are transferable and assignable, may be carried forward for 10 years, and are administered by the Alabama Department of Commerce; effective January 1, 2014.