Louisiana House Bill HB629

Louisiana 2011 Regular Session

• Introduced: 5/4/11
• Refer: 5/5/11
• Report Pass: 6/6/11
• Engrossed: 6/13/11
• Report Pass: 6/21/11

Caption

Creates the La. Entrepreneurial Assistance and Development (LEAD) Program for tax credits for venture capital investments (RE1 SEE FISC NOTE GF RV)

Impact

The bill introduces significant changes to how venture capital can be mobilized for small businesses, potentially improving access to growth funding for emerging companies. By focusing on businesses with fewer than 100 employees and certain revenue limitations, the bill tailors the scope of assistance to those most likely to benefit from such support. However, businesses operating in specified industries such as retail and natural resource extraction are excluded from participating in the program, ensuring that the focus remains on innovative sectors poised for growth. Overall, the implementation of this bill could foster job creation and economic expansion within Louisiana by enhancing the capabilities of small enterprises.

Summary

House Bill 629, known as the Louisiana Entrepreneurial Assistance and Development (LEAD) Program, establishes a framework to incentivize venture capital investments in eligible small businesses across Louisiana. The program aims to create a tax credit against insurance premium taxes for investors who allocate capital to 'LEAD funds,' which then make investments in prequalified small businesses. The credit is set at 75% of the investment amount and cannot be claimed until three years after the initial investment. This initiative is designed to uplift entrepreneurs by providing them with essential funding support, particularly during challenging economic conditions.

Sentiment

Reactions to House Bill 629 have been largely positive among proponents of entrepreneurial development and economic growth. Supporters view the legislation as a constructive step towards revitalizing the state's economy and addressing funding challenges faced by local businesses. However, there are concerns regarding the bill's limitations and classifications, as some critics argue that the restrictions on eligible industries could hinder broader economic opportunities. Additionally, the program's efficacy will be contingent upon its proper administration and the availability of funds, raising questions about its long-term sustainability.

Contention

Some notable points of contention around HB 629 include the perceived overregulation in defining eligible businesses, which some stakeholders argue could limit participation from a wider array of ventures that could benefit from capital investment. Additionally, the allocation of only $200 million in eligible capital under this program may lead to fierce competition for approvals, particularly if demand exceeds supply. Critics have also pointed out the potential challenges LEAD funds might face in navigating the complex application and reporting requirements, which may deter smaller investment entities from participating.