Individual and groups of investors have an opportunity to help Kentucky small businesses and get a tax credit for 2015.

The Kentucky Angel Investment Fund Tax Credit program allows people – or angel investors – who provide capital for startup companies to receive tax credits. Previous legislation allowed eligibility for only groups of angel investors. Earlier this year, new legislation allowed individual investors to participate as well.

Applications for qualified investors and qualified businesses are available through the Kentucky Cabinet for Economic Development at thinkkentucky.com.

Doug Rohrer, executive director of the Bowling Green office of the Kentucky Innovation Network – which is jointly funded by Western Kentucky University and the economic development cabinet – said angel investors are good sources of financial help when a small business owner needs more money than he or she is comfortable asking friends and family to contribute or taking out of his or her own pocket.

“The angel investors are the first people (owners turn to) after friends and family,” Rohrer said.

Qualified investors can receive a tax credit of up to 50 percent of their investment in Kentucky counties with high unemployment rates. Qualified investors can receive a tax credit of up to 40 percent of their investment in “enhanced counties,” or more economically successful counties, including Warren County.

“It’s a super incentive,” Rohrer said. The investor is “really only putting up 60 percent.”

Joe Hall, cabinet spokesman, said allowing individual investors to get credits for 2015 will help small business growth in Kentucky.

“It essentially expands our pool and gives more investors the opportunity to invest in small businesses,” Hall said. “It should build up our already strong small business community.”

Knowing they’ll get some of their money back is good motivation to get more people to invest, he said.

“This gives them the incentive and also the opportunity to create more business and more jobs,” Hall said.

An investor must have a certain net worth and make a certain amount of income, which is a federal requirement, Hall said.

Rohrer was unable to locate a local company that has benefited from angel investment, but he said he feels confident there have been both businesses and investors involved locally. Rohrer also said he is trying to either expand SOKY Capital – a group of accredited investors in southcentral Kentucky interested in investing in local companies – or create a new group for angel investors so he can bridge the gap between investors and businesses in need of capital.

An angel investor’s role could go beyond just financial benefits.

“Typically, angel investors don’t just give money. They often mentor and give advice,” Rohrer said.

The state funds for the program cannot exceed $3 million in a calendar year, so if an investor applied in 2015 after that $3 million has been allocated, they would not receive any tax credits, Hall said in an email.

“Like anything else, get in early or you might risk not getting in,” Rohrer said.

Many people already have submitted applications as both businesses and investors for 2015, Hall said.

“We think that bodes very well for the future of this program,” Hall said.

To qualify, a business must be a legal entity registered and in good standing with the Kentucky secretary of state and have all licenses and other registrations required to operate a business in the state.

The business must also be actively and principally engaged in a qualified activity within Kentucky or will be actively and principally engaged after the receipt of a qualified investment by a qualified investor. The business can have no more than 100 full-time employees and must have more than 50 percent of its assets, operations and employees located within the state.

The business must also either have a net worth of $10 million or less or has had a net income after federal income taxes for each of the two preceding fiscal years of $3 million or less, never received investments eligible for more than $1 million in aggregate angel investor tax credits or filed an application with and received KEDFA certification as a qualified small business in the program, Hall said.

— For more information, visit thinkkentucky.com/kaitc.

— Follow business reporter Monica Spees on Twitter at twitter.com/BGDNbusiness or visit bgdailynews.com.