Gov. Phil Bredesen on Aug. 4, signed legislation sponsored by Sen. Doug Overbey designed to grow jobs through a program that would provide capital to small businesses. The bill creates the TNINVESTCO Program to provide benefits to small, medium-sized, and start-up businesses that do not enjoy the same economic development incentives that have been provided to the larger companies that invest capital in Tennessee.
“The overwhelming majority of jobs in this state are created by small businesses,” Overbey said. “We are a state of entrepreneurs, but there is a lack of adequate capital to take those ideas and grow a business. This bill will give them that opportunity.”
The bill, SB 1203, authorizes tax incentives for private investors to create a pool of capital totaling $120 million. That money will be divided among professional investment firms. These Tennessee-based firms will then invest the money in small businesses located and headquartered in Tennessee. The money must remain invested in Tennessee for ten years.
Under the plan, investors receive a tax credit against insurance premiums taxes that spread over years three through ten of the program. Even though the capital will be available for small businesses immediately, there are no tax credits for investors until 2012. Capital returned to the state must first go to the General Fund. Once enough money has been repaid, the remaining funds will be deposited in the Rural Opportunity Fund.
“Throughout the 10 years, the money is invested and even beyond, the state will reap the benefits of job growth from these small businesses,” Overbey said. “This is a great opportunity for economic development in our state.”