Angel Investor Tax Credit
Louisiana’s Angel Investor Tax Credit (AITC) encourages accredited investors to invest in early stage, small wealth-creating Louisiana businesses that seek startup and expansion capital.
- Provides a 25% tax credit on investments by accredited investors who invest in businesses certified by Louisiana Economic Development as Louisiana Entrepreneurial Businesses (LEB).
- $3.6 million annual program cap.
- Investors can invest $720,000 per business per year and $1.44 million per business over the life of the program.
- The AITC Program sunsets on July 1, 2021.
The incentive is available to Louisiana businesses that are not involved in retail, real estate, professional services, gaming or gambling, natural resource extraction or exploration, or financial services, including venture capital funds
Qualifying uses of investment funds include:
- Capital improvements
- Plant equipment
- Research & development
- Working capital
Non-eligible uses of investment funds include:
- Pay dividends
- Redeem shares
- Repay debt
- Repay shareholders’ loans
What qualifies as an LEB?
- The principal business operations are in Louisiana, with Louisiana as the primary place of employment for the employees of the business.
- The business must possess a fully developed business plan that includes all appropriate long and short term forecasts and contingencies of business operations, including research and development, profit, loss and cash flow projections, and details of expenditure of angel investor funding.
- The business must have a Louisiana Tax Identification Number.
- The business has either gross annual sales of less than $10 million or a business net worth of less than $2 million.
- The business employs 50 or fewer full-time employees.
- The business must demonstrate that it will create quality jobs in the state.
- The business is not primarily engaged in the business of retail sales, real estate, professional services, gaming or gambling, natural resource extraction or exploration, or financial services including venture capital funds.
- The business has a plan of progression through which more than 50% of its sales will be derived from outside of Louisiana.
Who qualifies as an Accredited Investor?
An Accredited Investor is defined as:
- A natural person who has an individual or joint net worth with a spouse exceeding $1 million at the time of the investment.
- A natural person who has individual income exceeding $200,000 or joint income with a spouse exceeding $300,000.
- An Angel Pool, all of whose participants shall be Accredited Investors.
There is no formal application form for the LEB certification. Simply email the applicant’s business plan and documents or information that addresses all of the listed eligibility criteria for the LEB certification to email@example.com.
Applications for tax credit reservations for a calendar year (application form on the LED website) must be emailed to firstname.lastname@example.org on or after January 1 of the calendar year in which the investments are expected to be made in the business (earlier applications will be rejected and must be resubmitted on or after that date). An application fee shall be submitted with all applications for reservation of credits. The application fee shall be equal to 0.5 percent (0.005) times the total anticipated tax incentive for the investors with a minimum application fee of $500 and a maximum application fee of $15,000, payable to Louisiana Department of Economic Development. After acknowledgement and receipt of reservation, applicant will have 10 days to remit the appropriate fee by mail. Should fee not be received within the allotted time, the reservation will be canceled.
LOUISIANA ECONOMIC DEVELOPMENT
Phone: (225) 342-5883