An Act To Provide Funding for Incubators for Business Start-ups
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 5 MRSA §13100-A is enacted to read:
§ 13100-A. Small Business Incubator Program
1. Program established. The Small Business Incubator Program is established under the direction of the department to provide loans, loan guarantees and grants for the establishment, operation and administration of small business incubators.
2. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
A. "Incubator" means a program in which small units of space may be leased by a tenant and in which management maintains or provides access to business development services for use by tenants or a program without physical infrastructure in which participants access business development services to assist in the growth of their start-up small businesses.
B. "Local sponsor" means an organization that enters into a written agreement with the department to establish, operate and administer an incubator or to provide funding to an organization that operates an incubator.
C. "Participant" means a sole proprietorship, business partnership or corporation operating a business for profit through which the owner accesses business development services in an incubator.
D. "Tenant" means a sole proprietorship, business partnership or corporation operating a business for profit and leasing or otherwise occupying space in an incubator.
3. Applications. A local sponsor may submit an application to the department to obtain a loan, loan guarantee or grant to establish an incubator. An application must:
A. Demonstrate the plan for creating an incubator at a specified cost;
B. Demonstrate the ability to directly provide or arrange for the provision of business development services for tenants and participants in the incubator. These services must include, but are not limited to, financial consulting assistance, management and marketing assistance, business education and physical services;
C. Demonstrate a potential for sustained use of the incubator by tenants and participants through a market study or other means;
D. Demonstrate the ability to manage and operate the incubator; and
E. Include information as the department may require by rule.
4. Criteria for awards. The department shall review and accept applications for loans, loan guarantees and grants under this section based on the following criteria:
A. Ability of the local sponsor to carry out the provisions of this section;
B. Economic impact of the incubator on the community;
C. Conformance with regional and local economic development plans, if such plans exist; and
D. Proximity of the incubator to an accredited Maine community college, college or university, as defined in Title 20-A, section 12541, subsection 1.
5. Administration of loans, loan guarantees and grants. The department shall administer loans, loan guarantees and grants according to this subsection.
A. Loans awarded or guaranteed and grants awarded under this section may be used only for the acquisition and leasing of land and existing buildings, the rehabilitation and renovation of buildings or other facilities, the purchase of equipment and furnishings that are necessary for the creation and operation of the incubator and business development services, including, but not limited to, business management advising and business education.
B. Loans, loan guarantees and grants awarded under this section may not exceed 50% of total eligible project costs.
C. Payment of interest and principal on loans awarded under this section may be deferred at the discretion of the department.
6. Duties of local sponsor. A local sponsor, or the organization receiving assistance through the local sponsor, in establishing and operating an incubator with assistance from the Small Business Incubator Program, shall:
A. Secure title on a facility for the incubator or a lease of a facility for the incubator;
B. Manage the physical development of the incubator, including the provision of common conference or meeting space;
C. Provide furnishings and equipment to the incubator to provide business services to the tenants and participants;
D. Market the incubator and secure tenants and participants;
E. Provide financial consulting, marketing and management assistance services or arrange for the provision of these services for tenants and participants, including assistance in accessing private financial markets;
F. Set rental and service fees that would be revenue for the municipality upon approval from the department;
G. Encourage the sharing of ideas between tenants and participants and otherwise aid the tenants and participants using innovative technology and facilities;
H. Establish policies and criteria for the acceptance of tenants and participants and for the termination of occupancy of tenants so as to maximize the opportunity to succeed for the greatest number of tenants; and
I. Submit annual reports to the department that include a financial statement for the incubator, a summary of the economic impact of the incubator on the local community and a list of companies in the incubator.
7. Administration of loans; evaluation of reports. The department may make loans, loan guarantees and grants to local sponsors for incubators and must ensure that local sponsors receiving loans, loan guarantees or grants meet the conditions of this section. The department shall receive and evaluate annual reports from local sponsors.
8. Conversion of loans to grants. The department is authorized to review any previous loans made under the Small Business Incubator Program and, when appropriate, convert such loans to grant status.
9. Report. Beginning January 1, 2016, the department shall annually provide a report to the Governor, the President of the Senate and the Speaker of the House of Representatives that must include, but is not limited to:
A. The number of applications for incubators submitted to the department;
B. The number of applications for incubators approved by the department;
C. The number of incubators created through the Small Business Incubator Program;
D. The numbers of tenants and participants engaged in each incubator;
E. The number of jobs provided by each incubator;
F. The occupancy rate of each incubator; and
G. The number of firms that have left incubators and that are operating in the State and the number of jobs they have provided.
10. Fund established. The Maine Small Business Incubators Fund is established as a nonlapsing fund under the jurisdiction and control of the department. The fund consists of all money that may be appropriated to it, money that has been paid back from loans and any gifts, contributions, grants or bequests received from federal, private or other sources.
11. Tax credit. For any taxable year beginning after December 31, 2015, a taxpayer, including a charitable organization that is exempt from federal income tax and whose Maine unrelated business taxable income, if any, would be subject to the state income tax imposed under Title 36, Part 8, is entitled to a tax credit against any tax otherwise due under the provisions of Title 36, Part 8 and Title 36, chapter 357, excluding withholding tax imposed by Title 36, section 5250, in the amount of 50% of any amount contributed by the taxpayer to the Maine Small Business Incubators Fund during the taxpayer's tax year or any contribution by the taxpayer to a local sponsor after the local sponsor's application has been accepted and approved by the department. The tax credit allowed by this subsection must be claimed by the taxpayer at the time the taxpayer files the return and must be applied against the income tax liability imposed by Title 36, Part 8, after all other credits provided by law have been applied. That portion of a tax credit under this subsection that exceeds the taxpayer's tax liability may be carried forward for up to 5 years. The aggregate of all tax credits authorized under this subsection may not exceed $500,000 in any taxable year.
12. Transfer of tax credits. Notwithstanding any provision of law to the contrary, a taxpayer may sell, assign, exchange, convey or otherwise transfer tax credits allowed in subsection 11 under the terms and conditions prescribed in paragraphs A and B. The taxpayer may sell, assign, exchange or otherwise transfer allowed tax credits:
A. For no less than 75% of the par value of such credits; and
B. In an amount not to exceed 100% of annual allowed credits. The taxpayer acquiring allowed credits may use the acquired credits to offset up to 100% of the tax liabilities otherwise imposed by Title 36, excluding the withholding tax. Unused credits in the hands of the assignee may be carried forward for up to 5 years. The assignor shall enter into a written agreement with the assignee establishing the terms and conditions of the agreement and shall perfect such transfer by notifying the department in writing within 30 calendar days following the effective date of the transfer and shall provide any information as may be required by the department to administer and carry out the provisions of this subsection. The commissioner shall prescribe the method for submitting applications for claiming a tax credit transferred pursuant to this subsection and shall, if an application is approved, certify to the director of Maine Revenue Services that the taxpayer to whom the credit is transferred has satisfied all the requirements specified in this section and is eligible to claim the credit.
13. Rules. The department may adopt rules and guidelines that are necessary for the implementation of this section. Rules adopted pursuant to this subsection are routine technical rules pursuant to Title 5, chapter 375, subchapter 2-A.
Sec. 2. 36 MRSA §2535 is enacted to read:
§ 2535. Small business incubator tax credit
1. Credit allowed. A taxpayer that has made a contribution to a local sponsor under the Small Business Incubator Program pursuant to Title 5, section 13100-A, subsection 11 is allowed a credit in the amount of 50% of the tax that would otherwise be due under this chapter upon premiums that are attributable to the Small Business Incubator Program pursuant to Title 5, section 13100-A.
Sec. 3. 36 MRSA §5206-H is enacted to read:
§ 5206-H. Small business incubator tax credit
1. Credit allowed. A taxpayer that has made a contribution to a local sponsor under the Small Business Incubator Program pursuant to Title 5, section 13100-A, subsection 11 is allowed a credit in the amount of 50% of the tax that would otherwise be due under this chapter pursuant to Title 5, section 13100-A.
Sec. 4. 36 MRSA §5219-NN is enacted to read:
§ 5219-NN. Small business incubator tax credit
1. Credit allowed. A taxpayer is allowed a credit against the tax that would otherwise be due under this Part in the amount of 50% of any amount contributed by the taxpayer to the Maine Small Business Incubators Fund during the taxpayer's tax year or any contribution by the taxpayer to a local sponsor, as defined in Title 5, section 13100-A, after the local sponsor's application has been accepted and approved by the Department of Economic and Community Development.
summary
This bill enacts the Small Business Incubator Program under the direction of the Department of Economic and Community Development to provide loans, loan guarantees and grants for the establishment, operation and administration of small business incubators in Maine. It also establishes a small business incubator tax credit to provide incentives to Maine taxpayers to make contributions of private funds to be used to establish small business incubators.