Kentucky Business Incentives and Financial Programs
Kentucky's pro-business climate provides a number of incentives for businesses. The Kentucky Economic Development Finance Authority (KEDFA), established within the Cabinet for Economic Development to encourage economic development, business expansion, and job creation, provides financial support through an array of financial assistance and tax credit programs. Helping businesses in this way furthers the commonwealth's goals of achieving long-term economic growth and employment opportunities for its citizens.
KEDFA approval is required for participation in the loan and tax incentive programs. KEDFA meets the last Thursday of each month. Projects must be received by the last Friday of the month prior to the KEDFA meeting date in order to be considered.
Below is information on Kentucky's most commonly used incentive programs:
Kentucky Business Investment (KBI) Program
The new consolidated program is the Kentucky Business Investment (KBI) Program. An eligible company must be engaged in one of the following activities: 1) manufacturing; 2) agribusiness; 3) regional or national headquarters operations; or 4) certain nonretail service or technology activities. The minimum requirements for an eligible project are as follows: 1) create a minimum of 10 new, full-time jobs for Kentucky residents; 2) incur at least $100,000 in eligible costs; and 3) meet a minimum level of wages and benefits. The tax incentives involved with this program are available for up to 15 years for enhanced incentive counties or up to 10 years for all other counties. The incentive may be taken as: 1) up to 100 percent credit against the Kentucky income tax imposed on corporate income or limited liability entity tax arising from the project; 2) a wage assessment of up to 5 percent of the gross wages of each employee in enhanced counties or up to 4 percent (including up to 1 percent required local participation) of the gross wages of each employee in other counties.
Direct Loan Program (KEDFA)
KEDFA encourages economic development business expansion and job creation by providing business loans to supplement other financing. The Direct Loan Program provides loans at below-market interest rates (subject to the availability of state revolving loan funds) for fixed asset financing for agribusiness, tourism, industrial ventures, or the service industry. Retail projects are not eligible.
High-Tech Investment/Construction Pools
The Department of Commercialization and Innovation provides funds to help further the commercialization of a product, process, or other innovation. Incentives awarded are in the form of forgivable loans, with the amount of the loan primarily based on the applicant company's projected high-tech job creation. These forgivable loans typically range from $150,000 to $400,000 depending upon the project.
Kentucky Enterprise Initiative Act (KEIA)
For new or expanded service or technology, manufacturing, or tourism attraction project in Kentucky. KEIA provides a refund of Kentucky sales and use tax paid by approved companies for building and construction materials permanently incorporated as an improvement to real property. It is also available for Kentucky sales and use tax refunds for eligible equipment used for research and development and data processing equipment.
To find out if your business qualifies contact the Kentucky Cabinet for Economic Development where a professional economic development agent will be assigned to work with you. Your agent can answer your questions and guide you through the application processes.