About the Rural Business Development Tax Credit Program
You can help grow southwest Kansas and get a credit on your taxes at the same time. Kansas offers a Rural Business Development Tax Credit Program to help spur economic development statewide through 2012. Donations must be made by December 31 for any tax year.
An amazing $1,470,416 has been raised in southwest Kansas from 2006 through 2010. Great Plains has funded $968,789 in loans to southwest Kansas businesses. Including private, public and new equity funds, over $9.5 million has been financed. That’s 16 business projects generating 47 jobs!
How a Tax Credit Works
- Individuals and businesses may donate to Great Plains Development, Inc. The donation must be $250 or greater to receive a tax credit.
- Donors receive a Kansas income tax credit in an amount equal to 75% of the donation. For example, if you donate $10,000 to the GPDI Southwest Kansas Economic Development Fund, you will receive a Kansas income tax credit of $7,500. That may be deducted directly from your Kansas state income tax. If you only owe $1,000, you will still receive a refund for the balance of $6,500.
- If you itemize a personal or business tax return, the full amount is still eligible to be deducted from your federal taxes as an expense, reducing your federal liability. Banks may also choose privilege tax deduction. Always consult your tax advisor on your tax liabilities.
- How much of the credits are used for loans? A minimum of 60% of the funds raised will be used to create a revolving loan fund for business development and job creation in any of the 28 counties served by Great Plains.
- As a general rule, most loans to businesses will be $75,000 or less and be leveraged to the maximum extent with other programs such as Small Business Administration (SBA), Rural Development (USDA), Local and Regional Revolving Loan Funds and traditional bank loans. Interest rates may vary over time but should remain at a maximum of 4% above New York prime.
- One-half of the repaid interest and origination fees will be used for administration of the program. The remaining earned income goes back into the fund for additional loans. Loan applications are packaged and approved by Great Plains Development. Board of Directors.
- Up to 30% of the funds may be used for the following three categories:
- Funds are used for business support services such as business counseling, management seminars, classes and speakers, agri-tourism, and feasibility or market studies. These services will be provided by a cooperative effort from Great Plains Development, their economic development partners and educational institutions. This includes an allocation of 5% of the funds to the Enterprise Facilitation Fund.
- Funds are used for regional leadership development and marketing. This category is the development of community leadership capacity to strengthen the economic and social environment of the southwest Kansas region and to market our features to the world. This program should not be an exclusive group; rather it should include all ages of individuals from all classes and races.
- Funds are used for technology enhancements to assist businesses in southwest Kansas to compete in the global economy.