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 full employment for its citizens.
KEDFA approval is required for participation in the loan and tax incentive programs, except the Skills Training Investment credits, which are approved by the Bluegrass State Skills Corporation (BSSC). 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.
To find out if your business qualifies, contact the program representative, one of the three Regional Offices, or the Department for New Business 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 and approval processes.
Kentucky Rural Economic Development Act - KREDA (PDF)
For new and expanding manufacturing projects in qualified KREDA designated counties. Companies with projects approved under KREDA may potentially receive state income tax credits and job assessment fees for up to 100% of their capital investment for up to 15 years on land, buildings, site development, building fixtures and equipment used in a project.
Kentucky Jobs Development Act - KJDA (PDF)
For new and expanding service and technology related projects. KJDA projects may receive a 100% credit against the state income tax arising from a project and may collect a job assessment fee of up to 5% of the gross wages of each employee whose job is created by the project and who is subject to Kentucky income tax. Amounts can be up to 50% of project start-up cost and up to 50% of annual facility rental cost or rental value for up to 10 years. The local community must approve the project prior to the submission of an application.
Kentucky Industrial Development Act - KIDA (PDF)
For new and expanding manufacturing projects. Projects approved under KIDA may receive state income tax credits for up to 100% of its capital investment for up to 10 years on land, buildings, site development, building fixtures and equipment used in a project. Or, the company may collect a job assessment fee of 3% of the gross wages of each employee whose job is created by the approved project and who is subject to Kentucky income tax.
Kentucky Environmental Stewardship Act (KESA) (PDF)
For manufacturing environmental stewardship products that are unique products having a substantial positive impact on the environment. Companies with projects approved under KESA must have at least $5,000,000 in eligible cost and can potentially recover up to 25% of the projects fixed asset cost and 100% of employee skills training. The tax incentive is available for recovery over a 10-year period.
Kentucky Economic Opportunity Zone Program - KEOZ (PDF)
Counties, urban county governments, or cities of the first class apply through KEDFA (see above) for certification of an Opportunity Zone based on qualifying census tract information. New or expanding manufacturing or service/technology companies may be permitted the following inducements under the KEOZ program:
An income tax credit of up to 100% of the Kentucky income tax liability on income generated by or arising out of the project; and
A job development assessment fee of up to 5% of gross wages
Kentucky Investment Fund Act - KIFA (PDF)
KIFA provides tax credits to individuals and companies that invest in approved venture capital funds. Investors in KIFA approved funds are entitled to a 40% credit against Kentucky individual or corporate income tax or Kentucky corporate license tax. KEDFA (see above) approves investment funds and fund managers.
Direct Loan Program (KEDFA) (PDF)
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.
Small Business Loan Program (PDF)
The Small Business Loan Program is designed to helps small businesses acquire funding needed to start or grow their small business. A small business must be engaged in manufacturing, agribusiness, or service and technology. Loan funds may be used to acquire land and buildings, purchase and install equipment, or for working capital. The minimum loan amount of $15,000 and the maximum is $100,000. The approved company must create one new full-time job within one year of the loan closing. The Kentucky Economic Development Finance Authority (KEDFA) can fund up to 100% of the project costs and the loan can be used in conjunction with other lenders. The term of the loan can range from 3-10 years.
Enterprise Zones(PDF)
Encourages new or renewed development to targeted areas of the state by offering special tax incentives and eased regulations to businesses locating in a zone.
Kentucky Enterprise Initiative Act (KEIA)(PDF)
For new or expanded service or technology, manufacturing, or tourism attraction project in Kentucky. KEIA provides a refund of sales and use tax paid by approved companies for construction materials and building fixtures. It is also available for sales and use tax refunds for equipment used in research and development.
Industrial Revenue Bonds - IRB (PDF)
IRBs issued by state and local governments in Kentucky can be used to finance manufacturing projects and their warehousing areas, major transportation and communication facilities, most health care facilities, and mineral extraction and processing projects.
Local Government Economic Development Fund - LGEDF
The Local Government Economic Development Fund provides funding to counties in coal producing areas to help diversify their economies. The "multi-county" pool of funds which helps to finance joint ventures between eligible counties is administered by the Cabinet for Economic Development. For more information contact Andrew Dennis at 502-564-7140.
