SF2879

Purpose of the Bill

The bill aims to modify the requirements for businesses that are eligible for the small business investment credit in Minnesota. It seeks to extend the credit allocation and make it easier for businesses to qualify for these benefits.

Main Provisions

• Certification of Qualified Small Businesses: Businesses can apply for certification as a "qualified small business" or "qualified greater Minnesota small business." An application fee is required, and the application process is specified by the commissioner.
• Application Process: The commissioner must respond to applications within 30 days, either by certifying the business, requesting additional information, or rejecting the application. Fees are refundable if an application is deemed rejected after the timeline lapses.

• Eligibility Criteria:

  • Headquarters in Minnesota.
  • Majority of employees and payroll must be within the state.
  • Must be involved in innovation primarily through proprietary technology in sectors like high-tech fields, agriculture, and manufacturing.
  • Excludes businesses involved in real estate, insurance, and several other specified industries, unless they meet specific innovation criteria.
  • Must have fewer than 25 employees, pay adequate wages, and not have been operational beyond a specified number of years unless certain conditions apply.
  • Limited previous private equity investments and not publicly traded.

• Requirements for Greater Minnesota Businesses: Additional criteria for businesses located outside the metropolitan area, similar to the general requirements but focused on operations within greater Minnesota.

Significant Changes to Existing Law

• Increased Equity Investment Limit: The bill raises the cap on prior private equity investments from $4 million to $15 million for businesses to qualify for certification.
• Expansion of Eligible Business Sectors: Includes more diverse fields such as renewable energy and biotechnology within the "qualified high-technology field" definition.
• Extension for Medical and Pharmaceutical Research Businesses: Businesses focusing on medical devices or pharmaceuticals requiring FDA approval can be operational for up to 20 years, compared to 10 years for other businesses.

Relevant Terms

• Small business investment credit
• Qualified small business
• Greater Minnesota business
• Proprietary technology
• High technology fields
• Private equity investments