Business Services

SEED Capital Investment Fact Sheet

Purpose:
To provide an incentive, via a tax credit, for investors to invest in innovative businesses in the designated Minnesota border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville.

Tax Credit Amount:
45% of the amount invested in a qualified business, up to $112,500 per year. The credit is non refundable; it may be carried forward up to four years.

Qualified Business:
Must be a business that meets the following guidelines:

• adds value to a product, process or service
• increases revenue to a Minnesota business through sales to customers outside Minnesota or through sales to new customers who previously could not purchase the product or service from a Minnesota business
• has its principal office and a majority of its business activity, or a significant operation, in a border city
• has Minnesota residents as a majority of its employees at its principal office
• relies on innovation, research, or the development of new products and processes for its growth and profitability
• uses the investment for plant, equipment, research and development, marketing and sales activity, or working capital

Tax Credit Limitations:
The maximum aggregate credit allowed is determined by each border city for all qualified businesses in that city. Each border city, on an annual basis, must allocate a portion of the tax reductions it has available under its Border City Enterprise Zone Program to the SEED Capital Investment Credit. If investments exceed the allocated credit amount, the credit is provided to investors in chronological order based on the reported date of the investment in a qualified business.

How it Works:

• Each border city determines the amount it has available for enterprise zone tax reductions and confirms that amount with Department of Employment and Economic Development (“DEED”)
• Each border city allocates a portion of that amount to the SEED Capital Investment Credit and annually notifies DEED of the allocated amount
• A business applies to DEED for certification as a qualified business
• DEED provides a certification letter to qualifying businesses
• Investor invests in the certified qualifying business
• The business reports to DEED and to Department of Revenue (“DOR”) that a qualifying investment is made and provides investor with an investment verification form
• DEED reports to the border city that a qualifying investment is made
• Each border city tracks aggregate qualifying investments and its SEED credit allocation remaining
• DOR provides tax credit to investor

Please direct questions regarding the availability of SEED credits to the appropriate city:

Businesses seeking certification as a qualifying business should complete the SEED Certification Application [PDF].