Illinois Angel Investment Credit Program

 

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Due to the popularity of the Illinois Angel Tax Credit Incentive Program ("Angel Program"), all credits available for the Calendar Year 2019 allocation have been allocated or *will be allocated to the investor applications already received by the Department.

There is some great news to share regarding the successes of the Angel Program in CY19.

The Angel Program has:

  • Certified almost 150 Qualified New Business Ventures
  • Issued over 170 tax credit certificates to eligible investors – and will be increasing this number in the next couple of weeks
  • Placed over $80,000,000.00 of capital into the Illinois economy

The CY2020 allocation of $10,000,000 in tax credits will be available starting on January 2, 2020. The program will start accepting QNBV applications on January 2, 2020 thru an online application process. The Department is working on creating a streamlined application process for the QNBV and Investor application to benefit all stakeholders and improve the program.

Unfortunately, the program cannot accept additional investor applications or certify additional QNBVs for the 2019 program.

If you are a new company (or an existing QNBV with questions) and we can provide assistance navigating the angel program, please contact angelinvestment@illinois.gov.

Program personnel are always exploring ways to improve the Angel Tax Program, so if you have any suggestions or feedback that help make the Angel Tax Credit Incentive Program even better, please share by emailing angelinvestment@illinois.gov.

*If you have submitted an investor/claimant application, the Department will notify you after the application has been evaluated. Please be aware that on October 1st the program received 125 applications of which included over 70 unique investor applications. Based upon first review of those applications the tax credits requested exceeded the remaining allocation.

 

Creating an Incentivized Environment

The Illinois Angel Investment Tax Credit Program encourages investment in innovative, early-stage companies to help obtain the working capital needed to further the growth of their company in Illinois. Investors in companies that are certified as Qualified New Business Ventures (QNBVs) can receive a state tax credit equal to 25% of their investment (up to $2 million). 

Tax Incentive Allocations

A total of $10 million in Angel Investment tax credits are allocated in CY 2019, 2020 and 2021. Credits will be released by quarter, on a first-come first-served basis. Once tax incentive credits for a particular quarter are exhausted, no further credits can be allocated until the subsequent quarter.

Program Documents

Businesses - Qualified New Business Venture

Businesses must register for each taxable year in which they desire to be a qualified new business venture (QNBV).  QNBV applications are reviewed by a committee on a rolling basis throughout the calendar year.

Businesses seeking eligibility as a QNBV must meet all of the following conditions:

  • it has its principal place of business in Illinois;
  • it must be registered in good standing with the Illinois Secretary of State's Office to transact business in Illinois;
  • at least 51% of the employees employed by the business are located in Illinois;
  • the business has the potential for increasing jobs, increasing capital investment in Illinois, or both;
  • it is principally engaged in innovation in a qualifying sector as defined in the statute;
  • it is not principally engaged in a disqualifying sector as defined by statute;
  • it has fewer than 100 employees;
  • it has been in operation in Illinois for not more than 10 consecutive years;
  • it has received not more than $10,000,000 in aggregate investments; or it has received not more than $4,000,000 in investments that qualified for tax credits;
  • it agrees to maintain a minimum employment threshold in the State of Illinois for 3 years from the issue date of the last tax credit certificate.
CY2020 QNBV Applications will be available starting on January 2, 2020

QNBV Set-Asides

The 2018 Angel legislation created two specific set-asides.  The Registration Notice provided to each QNBV upon certification indicates which, if any, apply. 

  1. $500,000 in tax credits are set-aside for investments made in QNBVs which are “minority owned businesses", "$500,000 in tax credits are reserved for investments made in QNBVs which are “minority owned businesses", "women owned businesses", or "businesses owned by a person with a disability." The legislation specifies that these terms be defined as they are used in the Business Enterprise for Minorities, owned businesses", or "businesses owned by a person with a disability." The legislation specifies that these terms be defined as they are used in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.  More information on that Act can be found at http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=550&

  2. $500,000 in tax credits are set-aside for investments made in QNBVs with their principal place of business in counties with a population of not more than 250,000. 

CY2020 QNBV Applications will be available starting on January 2, 2020

Claimants -Investors

The Illinois Angel Investment Tax Credit Program offers tax credits to qualifying claimants in an amount equal to 25% of the claimant’s eligible investment made directly in a qualified new business venture.  While the tax credit may not exceed the taxpayer's Illinois income tax liability for the taxable year, the credit may be carried forward up to 5 years following the excess credit year. 

 Angel investors must adhere to the following requirements: 

  • Investments must be made in a certified QNBV.
  • Investments must be made on or after the date the QNBV was certified to participate in the program in the eligible CY.
  • Investments must be given at a risk of loss and in consideration for an equity interest of the QNBV. For the purposes of this definition, an investment is at risk of loss if its repayment depends entirely upon the success of the business operations of the qualified new business venture.
  • $10,000 is the minimum amount an applicant must invest in any single QNBV to be used as the basis for a credit.
  • $2,000,000 is the maximum amount an applicant may invest in a single QNBV to be used as the basis for a credit.
  • Investments must remain in the QNBV for a minimum of 3 years. Investors must attest their investment remains in the QNBV on the first, second and third anniversary of investment. Attestation forms will be accepted within 30 days prior to the anniversary of the investment.
  • Tax credits cannot be sold or otherwise transferred.
  • Only equity investments are eligible for tax credits.
  • The Department may accept a Simple Agreement for Future Equity (SAFE agreement) as an eligible investment if the agreement has certain provisions that keep a SAFE investor in more or less the same position as a non-SAFE equity investor in terms of risk exposure and the SAFE must convert automatically and unconditionally within three years from the investment date.
  • Investors must submit proof that funds were transferred and received by the QNBV. Acceptable documentation may include front and back of cancelled check, incoming wire documentation from the QNBV. The Department may request additional documentation as needed.
CY20 Investor/Claimant applications will be available starting on January 2, 2020
Questions regarding the Angel Investment Tax Credit program can be sent to angelinvestment@illinois.gov