For a list of Alabama economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.
UPDATED TAX INCENTIVES
Port Credit: One time income tax credit of up to $50 per TEU, $3 per net ton or $0.04 per net kilogram for increased cargo usage at an Alabama public port. Shipper must be engaged in manufacturing, warehousing or distribution of goods. Credit can be carried forward for five years.
Growing Alabama Credit: One-for-one tax credit for taxpayers making contributions to local economic development organizations undertaking an approved site prep or public infrastructure project. Tax credit can offset up to 50% of the taxpayer’s income tax liability and can be carried forward for five years.
Scroll down for additional tax incentives.
- Loan term: The blended useful life of improvements up to a maximum of 10 years
- Loan range: $50,000 – $4,000,000
- Use of proceeds: Loan funds can be used for up to 100% of costs remaining after applicable tax credits, grants or other subsidies
Certified Capital Company Program (CAPCO): The Alabama Certifies Capital Company, or CAPCO, is bringing new investment, jobs and opportunity to small businesses and communities across the state. The Alabama Department of Commerce administers the program. CAPCO financing, an alternative to conventional bank financing, can accommodate a slightly higher risk profile and provide a more flexible structure for growing businesses. Alabama companies being considered for CAPCO financing must meet the eligibility requirements established by the State listed below:
- Headquartered in Alabama or will be relocated to Alabama
- Principal business operations in Alabama or will be relocated to Alabama
- Have no more than 100 full-time employees, and 80% of employees are in Alabama or 80% of patrol is paid to employees in Alabama. Industries that qualify for the CAPCO program may include: manufacturing, processing, or assembling products; conducting research and development; providing services
Community Development Block Grant (CDBG) / Economic Development Fund: The Alabama Department of Economic and Community Affairs (ADECA) administers the CDBG program with funding provided by the U.S. Department of Housing and Urban Development. The program is available to all Non Entitlement communities that meet applicable threshold requirements. All projects must meet one of the National Objectives of the program – projects must benefit 51% low- and moderate- income people, aid in the prevention or clearance of slum and blight, or meet an urgent need. There are four types of program funds:
- Competitive Fund
- Community Enhancement Fund
- Planning Fund
- Economic Development Fund
The Economic Development Fund is available to all eligible communities supporting the creation or retention of jobs. Generally, applicants for ED assistance should have a commitment from the business to create or retain 15 or more jobs. The business should fall within the SIC codes 20-39 or provide a significant economic benefit. Projects must not include intrastate relocation. The program is available on a continuous cycle.
Industrial Access Road and Bridge: Industrial access funds are intended to provide adequate public access to new or expanding distribution, manufacturing and industrial firms. The industry must be committed to new investment and the creation of new jobs. The new access must be on public right of way for public use (state, city or county) and the project sponsor (city or county) must maintain the completed facility unless the facility consists of turn lanes, crossovers, etc., that are located on state highways. Industrial access funds are limited to construction, construction engineering and inspection costs. The project sponsor is responsible for all preliminary engineering, right-of-way acquisition and utility relocation costs.
Industrial Development Grant Program (Site Preparation): Provides grants to counties, municipalities, local industrial development boards or authorities organized as a public corporation in the state, or an airport authority organized as a public corporation in this state pursuant to Chapter 3 of Title 4, or whether created by general, or special or local laws, or general acts of local application, if such authority governs an airport operated by a county and at least one municipality therein jointly, for these purposes:
- Site preparation for land owned or possessed by lease by these entities.
- Reasonable rehabilitation of an existing building or structure, determined by the Grantee as being necessary to solicit or attract a Qualifying Project.
- The size of the grant depends upon the amount of capital investment:
|Capital Costs||Percentage of Capital Cost|
|Less than $200,000||5.0%|
|$200,000 to $499,999||3.5% (minimum $10,000)|
|$500,000 to $999,999||2.5% (minimum $20,000)|
|$1,000,000 to $1,999,999||1.5% (minimum $28,000)|
|$2,000,000 to $9,999,999||1.0% (minimum $32,000)|
|$10,000,000 or greater||0.75% (minimum $100,000; maximum $150,000)|
|$ 25,000,000 or greater||Maximum $150,000|
Industrial Revenue Bonds (IRBs): In Alabama, IRBs may be used as long-term financing of up to 100% of a project for:
- Acquisition of land, buildings, site preparation and improvements;
- Construction of buildings;
- Acquisition and installation of furnishings, fixtures and equipment;
- Capitalizable soft costs (e.g., architectural and engineering, interest incurred during construction, cost associated with bond issuance, etc.).
- Political subdivision issuing in the IRB retains ownership of the bond-financed facility and leases it back to the company at a rate sufficient to pay the principal and interest on the bonds.
- Tax-exempt IRBs issued at rates lower than conventional sources because the interest paid on the bonds is exempt from both federal and state income tax.
Typically, tax-exempt IRBs have interest rates ranging from 70-85% of prime and are limited to $10 million per single issuance and $40 million total maximum per company. Taxable IRBs have an interest rate equal to conventional loans and have no limit. Terms for both are normally 10-20 years and can finance up to 100% of the project costs. Contact www.madeinalabama.com/smallbusiness resources/localdevelopment/.
Revolving Loan Funds (RLF): The Alabama Association of Regional Councils (AARC) is comprised of twelve regional councils, each a separate organization, that provides a variety of services to the communities to their area. Each of the regional councils operates a revolving loan fund that provides supplemental financing for expanding and new businesses (located within its region) whose projects will result in the creation of new permanent jobs. RLF funds may be used in conjunction with SBA 504 and 7(a) guarantees, commercial loans, mortgage loans and other public sector revolving loans. RLF funds provide flexible terms, fixed interest rates, and up to 90% financing.
State Small Business Credit Initiative (SSBCI): On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 to help increase credit availability for small businesses. The Act created the SSBCI and Alabama was approved by the Treasury for $31,301,498. The Community and Economic Development Division of ADECA is responsible for implementing and managing the SSBCI program in Alabama. The loan guaranty is the most popular among the state’s lenders. The State Loan Guaranty Program is designed to enable leaders to make term loans or provide lines of credit to new or existing small businesses. The State guarantee will be for 50% of the principal value of the loan, and the State will share equally with the lender in losses resulting from loan defaults. The lender will pay a loan guarantee fee of 1% on the guaranteed portion of the loan.
Alabama New Market Tax Credit (NMTC): The New Market Tax Credit attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax return in exchange for making equity in specialized financial institutions called Community Development Entities (CDEs).
The NMTC enables low income communities to attract private investments that result in significant community benefits (e.g. jobs, community facilities, goods and services) and catalyze other private investments; provides local businesses with a flexible source of gap financing; allows CEOs to increase the volume of its lending and investing activities; and rewards investors with a significant benefit. Contact Alabama Department of Commerce Deputy Secretary of Commerce for more information.
Enterprise Zone Credit/Exemption: Under certain conditions, an enterprise zone credit or exemption for income tax, sales and use tax, and/or business privilege tax is available for qualified participants.
Full Employment Act of 2011: Businesses with 50 or fewer employees may receive a one-time income tax credit equal to $1,000 per new job paying over $10 per hour.
Heroes for Hire Credit: A one-time $1,000 income tax credit for each recently deployed, and now discharged, unemployed veteran hired and a $2,000 income tax credit to recently deployed, and now discharged, unemployed veterans who start their own businesses. Employer must also meet the requirements of the Full Employment Act of 2011.
Investment Credit: The investment incentive is a credit of up to 1.5% of the qualified capital investment expenses for a qualifying project for up to 10 years. This credit can be taken against the Alabama income tax liability and/or utility tax liability. For companies in a targeted county selling their output within 50 miles, the credit is available for up to 15 years. Investment Credit may be carried forward for 5 years. At the discretion of the Alabama Department of Commerce, the Investment Credit may be transferable for the first 3 years to generate cash for the project. Investment Credit transfers must be at least 85% of face value.
Jobs Credit: The job creation incentive is an annual cash rebate up to 3% of the previous year’s gross payroll (not including fringe benefits) for eligible employees for up to 10 years. For companies employing at least 12% veterans in their eligible workforce, up to an additional 0.5% job credit is available for the wages of veterans. For companies located in targeted counties, up to an additional 1% job credit is available.
AIDT (Workforce Recruitment and Training): AIDT was established to build a healthy state economy by recruiting and training a skilled workforce to attract new industries to the state and to expand existing industries. Job-specific pre-employment and on-the-job training programs are provided. The program provides a full range of customized technical training programs that are offered at no cost to employers and to the trainees. Leadership training programs are also available. In addition to training, AIDT offers services including trainee recruitment and screening, safety assistance, industrial maintenance assessments and continuous improvement/process improvement assessments. Training is conducted by AIDT staff or contracted instructors and delivered through classrooms or 38 Mobile Training Units (MTUs) customized to meet specific company needs.