Governor Signs New Tax Credit to Attract New Business Projects; Strengthen Illinois Economy

New law will support small businesses and attract more investors to Illinois

CHICAGO – Governor Rod Blagojevich signed into law Senate Bill 2015, designed to provide an economic stimulus for Illinois “in these difficult financial times.” The bill, sponsored by State Senator James F. Clayborne Jr. (D- East St. Louis) and Representative Arthur L. Turner (D-Chicago), establishes a new state incentive for investment entities that have been approved for the federal New Markets Tax Credit (NMTC) program. The law is meant to support small and developing businesses by making capital funds more easily available and will make the state more attractive to possible investors.

“During this national recession, we need to take every opportunity to promote economic development in our state. With the signing of this law, we will create jobs, spur investment, and promote new and innovative businesses here in Illinois,” the Governor said.
The Illinois New Markets Development Program, which is created by SB 2015, will provide state tax credits to investors against their state income tax liability to help drive at least $125 million into small businesses in Illinois low-income communities. In order to qualify, the investor must make investments into federally approved Community Development Entities (CDE) which, in turn, make investments in eligible projects located in low-income areas of Illinois. Many of these small businesses would be unable to qualify for development or expansion loans from large lending institutions because they lack credit history or necessary collateral. With the anticipation of the future tax credit, CDEs are able to make these loans available. 
To qualify as a CDE, an organization must demonstrate a primary a mission of serving, or providing investment capital for, low-income communities or low-income persons and maintain accountability to residents of low-income communities through representation on a governing board of or advisory board to the entity. The credit is claimed over a seven-year allowance period. The federal NMTC program was enacted by Congress in 2000 and extended for future years in both 2006 and 2008. It authorizes up to $23 billion of investment in low-income areas nationwide.
“We are always seeking innovative ways to promote Illinois as a place to do business. Illinois’ New Market Tax Credit will provide incentives for small business and investors to develop businesses and create jobs in low-income and under-served communities. This program will help strengthen Illinois’ economy and create needed jobs during these tough economic times,” Director of the Illinois Department of Commerce and Economic Opportunity Jack Lavin said.
The Illinois Department of Commerce and Economic Opportunity is responsible for qualifying the CDEs and ensuring that the total tax credit liability of the state does not exceed the $10 million cap in any year. The Illinois Department of Revenue is responsible for monitoring CDE commitments.
Senate Bill 2015 is effective immediately.