AEDC Small Business & Entrepreneurship Development Division
Incentive Programs for Entrepreneurs
The goal of these incentive programs is to stimulate the development of scalable tech, tech-enabled, and knowledge-based ventures to create high wage jobs within the state of Arkansas.
Equity Investment Tax Credit (EITC)
Capital ready businesses looking to raise capital
- The Equity Investment Tax Credit (EITC) will be provided in the form of state income tax credits to persons or companies investing in certain types of eligible businesses.
- The EITC is equal to thirty three and one-third percent (33 1/3%) of the approved amount invested by an investor in an eligible business.
- This credit is transferable one-time, which means it can be sold once if the original investor feels the better economic benefit is to sell it.
- The program is capped at $6.25 million tax credits per year.
- The EITC is administered by the Arkansas Economic Development Commission in consultation with the Arkansas Development Finance Authority.
Eligibilty
- An eligible business must pay on average, 150% of the lesser of the state or county average hourly wage.
- If the business meets the wage threshold, it can then qualify as a Targeted Business. A business must meet the following criteria in order to be defined as a Targeted Business
- It falls within one of the Emerging technology sectors, which are:
- Advanced materials and manufacturing systems
- Agriculture, food and environmental sciences
- Biotechnology, bioengineering and life sciences
- Information technology
- Transportation logistics
- Bio-based products
- The business must show proof of an equity investment of at least $250,000 (internal process)
- If the business cannot qualify as a Targeted Business, then, in addition to meeting the wage requirement, it can qualify for the EITC if it meets two of the following criteria.
- The business is in one of the Emerging Targeted Sectors listed above.
- The business is identified in a local or regional economic development plan as the type of business targeted for recruitment or growth within the community or region.
- The business is supported by a resolution of the city council or quorum court in the municipality or county in which the business is located or plans to locate.
- The business is supported by business incubators that are certified by the Arkansas Science and Technology Authority.
- The business is supported by federal small business innovation research grants.
- The business is supported by technology development or seed capital investments made by instrumentalities of Arkansas.
Technology Development Program (TDP)
Royalty-based investment where funding must be paid back. to the AEDC
The purpose of the Technology Development Program (TDP) is to assist in commercializing new, technology-based products and processes created or developed by inventors, businesses, Arkansas-based colleges or universities, and federal laboratories located in Arkansas. The program is intended to provide flexible “bridge” financing up to $100,000, for projects to develop qualified technologies. This investment incorporates a royalty provision not to exceed 5% of net sales revenue for a period of not more than 10 years, at which time the balance is due per the Royalty Payment schedule.
Objectives of the TDP investment:
- Develop technology emerging from sources of innovation in this state, including, but not limited to, colleges and universities, federal laboratories, small businesses, inventors, and entrepreneurs. • Evaluate and approve for funding only those proposed projects that are likely to lead to both direct and indirect job opportunities within Arkansas.
- Bridge funding gaps in SBIR Phase I & II, to create prototypes, to develop commercial applications for new technology or to pay for the validation of university technology.
Technology Transfer Assistance Grant (TTAG)
Administered by the Arkansas Manufacturing Solutions and the AEDC Board of Science and Technology
Assist with the deployment of a new technology in your business
The Technology Transfer Assistance Grant (TTAG) Program provides limited financial support for the transfer and deployment of innovative technology to Arkansas-based enterprises. Matching grants up to $5,000 are awarded to the technology transfer resource provider, who must possess the capability to locate and transfer innovative technology to a specific Arkansas-based enterprise. The Division will award the first $2,500 of project cost and the remainder will be cost-shared equally (50:50) between AEDC and the enterprise being assisted by the applicant.
Objectives of the TTAG program:
- Enhance the ability of Arkansas enterprises to compete in the marketplace by developing or improving products or processes through the transfer of technological solutions to technology-based, industry-driven problems.
- Under the Arkansas Manufacturing Solutions program, enterprises with a manufacturing NAICS code benefit by working with an approved technology transfer provider to adopt new technologies and improve their manufacturing processes.
- Under the Science & Technology program, Arkansas-based enterprises are assisted with costs associated with engineering or technical support fees, database searches, travel, responses to the Small Business Innovation Research Program (SBIR), Small Business Technology Transfer Program (STTR) or the Advanced Technology Program (ATP), and other costs to be decided on a case-by-case basis.
Arkansas SBIR Matching Grants
Administered by the AEDC Board of Science and Technology
The Arkansas Small Business Innovation Research Matching Grant Program (ArSBIRMGP), Act 166 of 2017, was created to stimulate innovation and growth among the state’s technology businesses. The program, administered by the Division of Science and Technology of the Arkansas Economic Development Commission (Division), may provide, to eligible businesses, discretionary matching grants of up to fifty percent (50%) of the amount of federal Phase I and Phase II Small Business Innovation Research (SBIR) grants, not to exceed $50,000 for Phase I awards and $100,000 for Phase II awards.
Objectives of the ArSBIRMGP are to:
- Create and retain high-tech jobs, especially high-wage jobs in middle-skill and high-skill occupations;
- Encourage innovative small businesses to engage in federally funded research that has the potential for technological innovation and commercialization;
- Increase the amount of SBIR funds invested in Arkansas businesses; and
- Induce the retention, growth, and location of companies in Arkansas.
What’s SBIR?
The Small Business Innovation Research (SBIR) program is a competitive, US government program that funds research and development (R&D) by small businesses. The program’s goals are to: Encourage innovation and entrepreneurship, Meet federal R&D needs, and Stimulate technological innovation.
What does this mean for startups looking to access these funds?
Because this is a matching grant, you have to first secure an SBIR grant at the federal level. Also, you can only receive this grant at the federal level if you are doing research and development in a specific area. See current research areas eligible for funding and learn more about this program here.
Want some examples of research areas? Here are a few samples -
- Modeling Tools for Army Vehicle (tanks and rotorcraft) Mobility Applications
- Fast Charge Silicon Anode Lithium-Ion Cells for Small UAS Systems
- Super-resolution beam scanning, wide bandwidth, optical photothermal infrared (O-PTIR) microscope
Want to view some past recipients and research from Arkansas that have received SBIR funding?
- High-Temperature Electronics for Real-Time, In-Line Monitoring of Molten Salt Reduction and Oxidation (RedOx) – Ozark Integrated Circuits
- Feasibility of Relay Trucking Model to Benefit Rural Workforce – FR8relay
- Microfluidic Cartridge for Point-of-Care Hematology Analysis – Cellia Science, Inc.
Want to schedule a consultation with an SBIR expert?
Enroll in the ARise program and then schedule an initial onboarding session.
Research & Development Income Tax Credit Program (R&D)
The discretionary Research & Development Income Tax Credit Incentive Program (R&D) is intended to provide incentives for university-based research, in-house research of several kinds, and research and development in start-up, technology-based enterprises. The program is administered by the Division of Science and Technology of the Arkansas Economic Development Commission (Division) to incentivize companies in the earliest stages of development and to assist knowledge-based companies with limited funding to continue their research and development programs to remain competitive.
Objectives of the R&D Incentives program:
- Provide an income tax credit of 20% for qualified in-house research and development expenditures for a five (5) year project conducted by a mature firm;
- Provide an income tax credit of 33% for a targeted business conducting qualified in-house research over limited five (5) year period; and
- Provide an income tax credit not to exceed $50,000 per year for emerging firms engaged in research in an area of strategic value for the first (5) years following the signing of a financial incentive agreement.
Seed Capital Investment Program (SCIP)
Royalty-based investment where funding must be paid back. to the AEDC
The Seed Capital Investment Program (SCIP) can provide working capital to help support the initial capitalization or expansion of technology-based companies located in Arkansas. The program can provide working capital up to $500,000 for the company’s total financing needs. Investments made by the SCIP fund are repaid through a royalty-based agreement.
The SCIP Application requires a Business Plan. The (original) SCIP rules contain specific requirements for the Business Plan which are described below.
SCIP Business Plan
4.3.3 An intelligent, thorough, and precise business plan which includes:
4.3.3.1 A summary of the history and business of the enterprise;
4.3.3.2 A description of the background of the enterprise;
4.3.3.3 A detailed description of marketing plan, management, operations plan, financial statements and projections, product, and technology involved, and other information as requested by the Division. 4.3.3.4 A detailed description of the amount, timing, and use of funds requested from the Division; 4.3.3.5 A statement describing the amount and sources of the matching funds;
4.3.3.6 A detailed description of potential economic impact including the number, location, the type of jobs created, the dollar cost per job, areas affected, and in what manner; and
4.3.3.7 A signed statement from the applicants indicating they understand the Division’s position on the Freedom of Information Act and how it relates to confidential and proprietary information.
Objectives of the Seed Capital Investment Program
- Foster the formation and development of innovative, technology-based business enterprises that will stimulate the economy of Arkansas through increased employment and leveraging of private investment.
• Assist Arkansas-based enterprises with initial capitalization for scientific or technological projects for which the enterprise cannot secure sufficient capital through traditional sources. - Recoup investments with a return of capital and appreciation benefitting the State and its citizens through increased employment, tax revenues and the benefits and opportunities realized through advanced science and technology.