FRANKFORT— Small business owners in Kentucky may soon have more access to capital investments.
House Bill 308, otherwise known as the Kentucky Rural Jobs Act of 2022, would allow insurance premium tax credits for capital investment companies that invest in small businesses in rural Kentucky. These businesses often have difficulty obtaining a loan or attracting investors on their own.
“In a nutshell, this bill creates access to capital for small businesses that maybe could not get that capital somewhere else,” said Rep. Richard Heath, R-Mayfield. The House Agriculture Committee voted to approve HB 308 on Wednesday.\
HB 308 would create a $125 million fund for the project, with $75 million coming from the state in premium tax credits that cap out at $15 million per year beginning in 2024. The Department of Revenue would process the applications.
Bill sponsors Heath and Rep. John Blanton, R-Salyersville, have filed similar legislation in the past. Blanton told the committee on Wednesday that small improvements have been made to the bill over the years.
One of those changes includes adding the Western Kentucky counties listed in the Presidential Declaration of Emergency from the December tornadoes to the list of eligible counties. Heath said many businesses in Western Kentucky did not have insurance or may not receive enough money from insurance to cover the cost of rebuilding.
Other types of businesses that would qualify to apply include those with less than 250 employees or businesses located in a rural county of less than 50,000 people. Consideration would also be given for businesses in opportunity zones in low income, urban areas and businesses in areas with a labor force participation rate below the national average.
“So many small businesses have great potential, but they need capital,” Heath said. “The bill will bring private capital, incentivized in part by a state premium tax, to a variety of businesses such as manufacturing, agribusiness, technology companies and others.”
Under HB 308, approved small businesses would be able to use capital investment funds to purchase new machinery, hire and train new employees, and more.
Heath and Blanton worked with representatives from investment firm Advantage Capital in drafting the bill. Heath also said the bill has support from the Kentucky Bankers Association, Kentucky Farm Bureau and the Kentucky Department of Agriculture.
During discussion, Rep. Josie Raymond, D-Louisville, asked why successful investors need a monetary incentive to invest in rural Kentucky.
Advantage Capital representative Tony Toups explained that investors often have to wait longer to see revenue from investing in rural small businesses and that these types of incentives are needed to attract capital investment.
Rep. James Tipton, R-Taylorsville, and House Minority Caucus Chair Derrick Graham, D-Frankfort, spoke in favor of the bill. However, Graham was not in favor of the process.
Heath responded that he intended to file the bill last week, but that did not happen as planned. However, HB 308 will undergo another hearing in the House Appropriations and Revenue Committee before moving to the House for a floor vote.
“I urge each of your all’s support to help us in the rural areas,” Blanton said. “We’re not looking for handouts. We’re looking for a hand up.”
The House Appropriations and Revenue Committee will consider HB 308 at a later date.