The Advanced Industry Investment Tax Credit program is currently accepting applications from both investors and investee companies.
Current Program Status
The Colorado Advanced Industry Investment Tax Credit helps Colorado's advanced industry companies receive more capital from Colorado investors.
Requirements and Eligibility
The investor, the investee and the investment all must meet certain criteria:
The investor must be an individual, S corporation, partnership, LLC or other business entity. C corporations are not eligible to be investors in this program.
The investee must:
- Be a corporation, partnership, LLC or other business entity. Individuals are not qualified.
- Be in one of the advanced industries listed above.
- Have its headquarters located in Colorado or have at least 50% of its employees in Colorado.
- Have received less than $10 million from third-party investors since the business was formed.
- Have annual revenues of less than $5 million.
- Have been actively operating and generating revenue for less than 5 years.
The investment must meet the following criteria:
- The investment must have been received by the investee on or after January 1, 2016.
- The investment must be an equity security of at least $10,000. Convertible debt does qualify as equity for this program.
- The investor must hold no more than 30% of the voting power before the investment.
- The investor must hold less than 50% of the voting power after the investment.
Applications must be submitted online via the OEDIT website. Applications must be submitted by the investor, not the recipient business.
In the course of the application process, the following documents will need to be uploaded:
- Term Sheet of the Investment
- Proof of Funding
- Capitalization Table (click here for template)
- Statement of Good Standing from the Secretary of State
- Proof of Business Organization (articles of incorporation, proof of subchapter S status, etc.)
All tax credits are processed on a first come, first served basis. Since applications can only be submitted after the transaction has taken place, investors are encouraged to submit their applications as soon as possible. If the statutory limit on tax credits for the program is reached, the program will suspend accepting tax credit applications until the first business day of the following year.
How the Credit is Calculated
- If the business receiving the investment is not in a rural or economically distressed area, the tax credit to the investor is 25% of the qualified investment, up to the $50,000 maximum allowable tax credit amount (per investment).
- If the business receiving the investment is in a rural or economically distressed area, the tax credit to the investor is 30% of the qualified investment, up to the $50,000 maximum allowable tax credit amount (per investment).
- An investor can only claim one tax credit for an investment in a business. However, an investor may apply for separate credits for investments in different companies.
- An investee may have multiple investors, each of whom can apply for the tax credit.
- Advanced Industry Investment Tax Credits are a credit against a Colorado state income tax liability. These credits are issued to the investor, not the investee. Credits must be used by the investor; they are not transferable or salable. Credits may be carried forward five years. Credits are not refundable.
- Both the investor and the investee must have an account with OEDIT, in the department of Business Funding and Incentives.
- Both the investor and the investee should read the Program Manual. This document contains step-by-step instructions on filling out the applications.
- The investee must certify that they are eligible to participate in the program. This certification can be done by clicking the button below. (Note that it is permissible for the investee to certify after the investor has applied for the credit, however certifying before the application will greatly expedite the process).
- If the investee company is located in an Enterprise Zone, they need to have a valid Enterprise Zone pre-certification number. This will result in a larger credit percentage - 30% of the investment instead of the standard 25%. Enterprise Zone pre-certification
- The investor must make the investment. The tax credit application cannot be submitted until the funds are received by the investee.
- The investor must apply online for the tax credit. This can be done by clicking the apply button.
- The applications will be reviewed by OEDIT, and the parties will be notified of the determination.
Companies that are eligible for the Advanced Industry Tax Credit are also encouraged to learn about the Advanced Industries Accelerator Programs, which support critical industries in their various phases of growth.