Ala. Code § 40-9H-1 Short Title.
40-9H-1. Short Title.
This chapter shall be known and may be cited as the Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act.
(Act 2021-492, §1.)
Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act.
Ala. Code tit. 40, ch. 9H
in effectAla. Code § 40-9H-2 Definitions.
40-9H-2. Definitions.
As used in this chapter, the following words shall have the following meanings:
(1) AFFILIATE. An entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another entity. For the purposes of this subdivision, an entity is controlled by another entity if the controlling person holds, directly or indirectly, the majority voting or ownership interest in the controlled person or has control over the day-to-day operations of the controlled person by contract or by law.
(2) AGRIBUSINESS. A business that earns a majority of its revenues from either farming, forestry, biotechnology, fisheries, or biofuels and the processing, manufacturing, packaging, storage, distribution, marketing, and sales of those products or commodities, or the design, creation, manufacture, marketing, or sales of technology, equipment, or supplies related to those businesses.
(3) CLOSING DATE. The date the department and the growth fund execute the SSBCI loan agreement.
(4) DEPARTMENT. The state body, department, subdivision, or agency authorized by the state to direct federal funds available under Subtitle C of Title III of the American Rescue Plan Act of 2021.
(5) FOLLOW-ON CAPITAL. The sum of 50 percent of each initial growth investment, subsequent growth investments made to satisfy subdivision (a)(2) of Section 40-9H-5 and any additional financing received by a growth business on or after the date of the initial growth investment, including senior debt, subordinate debt, mortgage debt, equipment financing, mezzanine debt, convertible notes, revolving lines of credit, letters of credit, capital leases, preferred equity, participating preferred equity, convertible preferred equity, common equity, warrants and simple agreements for future equity, and any other financing approved by the department.
(6) FOLLOW-ON CAPITAL PERCENTAGE. Fifty percent multiplied by a fraction, the numerator of which is the aggregate follow-on capital reported to the department in reports submitted pursuant to subsection (b) of Section 40-9H-6 and the denominator of which is 10 times the amount of the SSBCI loan. The percentage may exceed 50 percent.
(7) GROWTH BUSINESS. A business to which all of the following apply at the time of the initial investment in the company by a growth fund:
a. Has fewer than 200 employees.
b. Has its principal business operations in one or more growth zones in the state.
c. Is made in any of the following:
1. Any business in North American Industry Classification System codes 11, 21, 22, 23, 31 through 33, 48 through 49, 54, or 62 or, if not engaged in those industries, the department determines that the investment will be beneficial to the growth zone.
2. An agribusiness.
3. A minority owned business.
(8) GROWTH FUND. An entity certified by the department under subsection (g) of Section 40-9H-3.
(9) GROWTH INVESTMENT. Any capital or equity investment in a growth business or any loan to a growth business with a stated maturity at least one year after the date of issuance, provided that with respect to any loan to a growth business secured by accounts receivable, inventory, real estate, or other tangible property, the chief executive officer or similar official of the growth business executes an affidavit that the business sought and was denied similar financing from a banking institution doing business in this state. Fifty percent of a growth investment shall be comprised of a draw on the SSBCI loan with the remaining 50 percent funded with the growth fund’s matching capital.
(10) GROWTH ZONE. A rural county of the state with less than 50,000 in population pursuant to the 2020 Federal Decennial Census, or a qualified opportunity zone as designated pursuant to 26 U.S.C. § 1400Z-1 with a poverty rate of at least 20 percent, or otherwise meeting the definition of low-income community in 26 U.S.C. § 45D.
(11) HIGH WAGE EMPLOYMENT POSITION. An employment position that is filled, pays a wage of at least 110 percent of the county average as noted in the most recent quarterly County Employment and Wages report by the Bureau of Labor Statistics of the United States Department of Labor, and requires at least 35 hours of work per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.
(12) INVESTMENT AUTHORITY. The amount stated on the notice issued under subsection (g) of Section 40-9H-3 certifying the growth fund.
(13) JOBS RETAINED. The number of high wage employment positions that existed before the initial growth investment and for which the growth business’s chief executive officer or similar officer certifies that the high wage employment position would have been eliminated but for the initial growth investment. The retained jobs of a growth business shall be calculated each year based on the monthly average of high wage employment positions. The reported number of retained jobs may not exceed the number reported on the initial report required under subsection (a) of Section 40-9H-6.
(14) MANAGEMENT FEE. An amount equal to three percent per annum of the growth fund’s investment authority that accrues annually, but shall not be paid until the growth fund exits the program in accordance with subsection (e) of Section 40-9H-5.
(15) MATCHING CAPITAL. An amount of capital raised by the growth fund as debt or equity and invested in growth businesses. Matching capital shall only be considered debt of the growth fund and eligible for repayment pursuant to paragraph (e)(2)a. of Section 40-9H-5 if the growth fund provides evidence of such direct or indirect debt to the department.
(16) MINORITY OWNED BUSINESS. A business that is more than 50 percent owned by one or more individuals of African-American, Asian, or Hispanic origin.
(17) NEW ANNUAL JOBS. Except as provided in paragraph c., the term means the difference between paragraphs a. and b. as follows:
a.1. The monthly average of high wage employment positions for the preceding calendar year.
2. If the preceding calendar year contains the initial growth investment, the monthly average of high wage employment positions for the months including and after the initial growth investment and before the end of the preceding calendar year.
b. The number of high wage employment positions at the growth business on the date of the initial growth investment.
c. If the amount calculated in subparagraph a.1. is less than zero, the new annual jobs amount is equal to zero.
(18) NEW ANNUAL JOBS AND JOBS RETAINED PERCENTAGE. Fifty percent multiplied by a fraction, the numerator of which is the number of new annual jobs and jobs retained reported in annual reports submitted to the department pursuant to subsection (b) of Section 40-9H-6 and the denominator of which is the number of new annual jobs and jobs retained set forth in the growth fund’s certification provided pursuant to subsection (g) of Section 40-9H-3. The percentage may exceed 50 percent.
(19) PRINCIPAL BUSINESS OPERATIONS. The place or places where at least 60 percent of the business’s employees work or where employees that are paid at least 60 percent of the business’s payroll work. A business that has agreed to relocate or hire new employees using the proceeds of a growth investment to establish its principal business operations in a growth zone in the state shall be deemed to have its principal business operations in this new location, provided the business satisfies this requirement within 180 days after receiving the growth investment, unless the department agrees to a later date.
(20) PROGRAM EXIT. The process described in subsection (e) of Section 40-9H-5.
(21) SSBCI. The federal State Small Business Credit Initiative pursuant to Subtitle C of Title III of the American Rescue Plan of 2021.
(22) SSBCI FUND. The SSBCI Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act Account which is hereby established.
(23) SSBCI FUNDING. An amount equal to twenty-five million dollars ($25,000,000) of the State of Alabama’s allocation of funds pursuant to Subtitle C of Title III of the American Rescue Plan Act of 2021 which shall be deposited in the SSBCI fund.
(24) SSBCI LOAN. A loan made to a growth fund using SSBCI funding. The department and the growth fund shall execute a loan agreement which shall provide for:
a. An interest rate of one percent interest compounding annually which shall be due upon program exit or acceleration pursuant to Section 40-9H-5.
b. Forgiveness at exit of a percentage of principal and interest due on the SSBCI loan equal to the sum of the follow-capital percentage and the new annual and jobs retained percentage, provided forgiveness shall not be available with respect to SSBCI loans accelerated pursuant to Section 40-9H-5.
c. Subordination to matching capital funded directly or indirectly as debt, which subordination may be revoked pursuant to Section 40-9H-5.
d. Draws in connection with growth investments in accordance with subsection (c) of Section 40-9H-4.
(Act 2021-492, §2; Act 2024-403, §1.)
Ala. Code § 40-9H-3 Deposit of Ssbci Funding; Applications for Certification.
40-9H-3. Deposit of Ssbci Funding; Applications for Certification.
(a) Upon receipt of an allocation of funds pursuant to Subtitle C of Title III of the American Rescue Plan Act of 2021, the department shall cause the SSBCI funding to be deposited in the SSBCI fund.
(b) Within 30 days of the approval of the state’s application for federal funds pursuant to Subtitle C of Title III of the American Rescue Plan Act of 2021, the department shall accept applications for certification as a growth fund on a form prescribed by the department. The application shall include all of the following:
(1) The total investment authority and SSBCI loan sought by the applicant not to exceed fifteen million dollars ($15,000,000) and seven million five hundred thousand dollars ($7,500,000), respectively.
(2) Evidence that the applicant, or an affiliate of the applicant, is licensed as a rural business investment company under 7 U.S.C. § 2009cc or as a small business investment company under 15 U.S.C. § 681, including a certificate executed by an executive officer of the applicant attesting that the license remains in effect and has not been revoked, and that at least one principal in a rural business investment company or a small business investment company is, and has been for at least five years, an officer or employee of the applicant or an affiliate of the applicant on the date the application is submitted.
(3) Evidence that as of the date the application is submitted, the applicant or affiliates of the applicant have invested at least fifty million dollars ($50,000,000) in, or lent at least fifty million dollars ($50,000,000) to, nonpublic companies located in nonmetropolitan counties, as defined by the Office of Management and Budget within the Office of the President of the United States, on the basis of county or county-equivalent units and invested at least twenty-five million dollars ($25,000,000) in, or lent at least twenty-five million dollars ($25,000,000) to, minority owned businesses.
(4) An estimate of the number of aggregate new annual jobs that will be created and jobs retained in this state because of the applicant’s growth investments.
(5) A business plan that includes a revenue impact assessment projecting state and local tax revenue, as well as reduced state expenditures, to be generated by the applicant’s proposed growth investments prepared by a nationally recognized third-party independent economic forecasting firm using a dynamic economic forecasting model that analyzes the applicant’s business plan over the 10 years following the date the application is submitted to the department.
(6) A letter of credit issued to the applicant from a depository institution equal to at least 50 percent of the amount of investment authority requested or similar evidence that the applicant has secured matching capital equal to such amount.
(7) A nonrefundable application fee of twenty thousand dollars ($20,000) payable to the department.
(8) An education and marketing plan to educate growth businesses regarding the availability of funds and requirements for participation pursuant to this chapter.
(c) Within 30 days after receipt of a completed application containing the information set forth in subsection (b), the department shall grant or deny the application. The department shall deem applications received on the same day to have been received simultaneously. The department shall approve investment authority up to an amount that would allow not more than fifty million dollars ($50,000,000) of investment authority and twenty-five million dollars ($25,000,000) of SSBCI loans. If requests for investment authority and SSBCI loans exceed this limitation, the department shall proportionally reduce the investment authority and SSBCI loan for each approved application as necessary to avoid exceeding the limit.
(d) The department shall deny an application if any of the following are true:
(1) The application is incomplete.
(2) The applicant does not satisfy all the criteria described in subdivisions (2), (3), (6), and (7) of subsection (b).
(3) The revenue impact assessment submitted under subdivision (b)(5) does not demonstrate that the applicant’s business plan will result in an economic impact on this state over a 10-year period that exceeds the growth fund’s SSBCI loan.
(4) The department has already approved the maximum amount of investment authority and SSBCI loans allowed under subsection (c).
(e) If the department denies an application, the applicant may provide additional information to the department to complete, clarify, or cure defects in the application identified by the department, except for failure to comply with subdivision (b)(6), within 15 days of the notice of denial for reconsideration and determination. The department shall review and reconsider the applications for which additional information is provided within the 15-day period within 30 days and, if approved, the application shall be considered complete as of its original submission date.
(f) The department may not reduce the requested investment authority or deny a growth fund application for reasons other than those described in subsections (c) and (d).
(g) Upon approval of an application, the department shall certify the applicant as a growth fund, specifying the amount of the applicant’s investment authority, SSBCI loan, aggregate required matching capital, and the number of new annual jobs and jobs retained that will be required of the growth fund, which shall match those projected in the growth fund’s application, prorated on the basis of the investment authority awarded to the growth fund.
(h) An approved growth fund may apply for additional investment authority and SSBCI loans once it has invested 100 percent of its outstanding investment authority.
(Act 2021-492, §3; Act 2024-403, §1.)
Ala. Code § 40-9H-4 Ssbci Loan Agreement; Growth Investments.
40-9H-4. Ssbci Loan Agreement; Growth Investments.
(a) Within 30 days of certification of a growth fund, the department shall enter into the SSBCI loan agreement with the growth fund and segregate for draws by the growth fund in the SSBCI fund an amount of SSBCI funding equal to the SSBCI loan awarded to such growth fund.
(b) A growth fund, before making a growth investment, shall request from the department a written opinion as to whether the business in which it proposes to invest satisfies the definition of a growth business. The department, not later than 15 business days after the date of receipt of the request, shall notify the growth fund of its determination. If the department fails to notify the growth fund of its determination within 15 business days, the business in which the growth fund proposes to invest shall be considered a growth business. Each request for a written opinion shall be accompanied by a five hundred dollar ($500) opinion fee payable to the department.
(c) At least five business days prior to a growth investment, a growth fund shall make a draw request on the SSBCI loan to the department. The draw on the SSBCI loan shall not exceed 50 percent of the proposed growth investment. At least two business days prior to a growth investment, a growth fund shall notify the department of the date of the closing of the growth investment and the department shall transfer the amount of draw requested from the SSBCI fund to an account designated by the growth fund on the following day. The growth fund shall return the proceeds of the draw if the growth investment is not made within the three business days of receipt of the draw unless the return is waived by the department.
(Act 2021-492, §4; Act 2024-403, §1.)
Ala. Code § 40-9H-5 Growth Fund Forfeitures; Notice; Application to Exit Program.
40-9H-5. Growth Fund Forfeitures; Notice; Application to Exit Program.
(a) A growth fund shall forfeit its management fee, the SSBCI loan shall be immediately due and its subordination immediately revoked, and remaining draws on the SSBCI loan shall be forfeited if:
(1) Within 12 months of the closing date:
a. The growth fund does not invest 100 percent of its investment authority in growth investments in this state, of which at least 25 percent shall be invested in agribusiness and at least 25 percent shall be invested in minority owned businesses, and of which at least 50 percent shall be invested in growth businesses located in rural areas and at least 25 percent shall be invested in growth businesses located in qualified opportunity zones.
b. With respect to awards of investment authority less than seven million five hundred thousand dollars ($7,500,000), the growth fund does not invest 100 percent of its investment authority in this state, of which at least 50 percent of growth investments shall be made in agribusiness or minority owned businesses and at least 75 percent of growth investments shall be made in rural areas or opportunity zones.
(2) The growth fund, after satisfying subdivision (1), fails to maintain growth investments equal to 100 percent of its investment authority until the sixth anniversary of the closing date in accordance with the levels set forth in subdivision (1). For the purposes of this subdivision, a growth investment is maintained even if it is sold or repaid so long as the growth fund reinvests an amount equal to the capital returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of the capital. Amounts received periodically by a growth fund shall be treated as continuously invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the following calendar year.
(3) The growth fund, before program exit, makes a distribution or payment that results in the growth fund having less than 100 percent of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash and other marketable securities, or makes a distribution or payment to an equity holder, other than to fund payments with respect to matching capital funded indirectly as debt, without consent of the department.
(4) The growth fund makes a growth investment in a growth business that directly or indirectly through an affiliate owns, has the right to acquire an ownership interest in, makes a loan to, or makes an investment in the growth fund, an affiliate of the growth fund, or an investor in the growth fund. This subdivision does not apply to investments in publicly traded securities by a growth business or an owner or affiliate of the growth business. For purposes of this subdivision, a growth fund shall not be considered an affiliate of a growth business solely because of its growth investment.
(b) The maximum amount of growth investments in a growth business, including amounts invested in affiliates of the growth business, that may be counted towards its satisfaction of the requirements of subdivisions (a)(1) and (2) is the greater of three million dollars ($3,000,000) or 20 percent of its total investment authority, exclusive of repaid or redeemed growth investments.
(c) Upon violation of this section, the department shall notify the growth fund. The growth fund shall have 90 days from the date the notice was received to correct any violation outlined in the notice to the satisfaction of the department and to avoid the penalties set forth in subsection (a).
(d) If an SSBCI loan is accelerated, the remaining draws on the SSBCI loan and associated investment authority shall not count toward the limit on the SSBCI loans and total investment authority described by subsection (c) of Section 40-9H-3. The department shall first award reverted investment authority and SSBCI loans on a pro rata basis to each growth fund that was awarded less than the amount requested in an application. The department may award any remaining investment authority and SSBCI loans to new applicants.
(e)(1) On or after the seventh anniversary of the closing date, a growth fund may apply to the department to exit the program and no longer be subject to regulation except as set forth in subdivision (2). The application shall include a calculation of the follow-on percentage and the new jobs and retained jobs percentage. The department shall respond to the application within 30 days of receipt. In evaluating the application, the fact that the SSBCI loan has not been violated and that the growth fund has not received a notice of revocation that has not been cured under subsection (c) shall be sufficient evidence to prove that the growth fund is eligible for exit. The department may not unreasonably deny an application submitted under this subsection. If the application is denied, the notice shall include the reasons for the determination.
(2) On or after an exit under this subsection, the growth fund may make distributions and payments as follows:
a. First, to pay principal and interest on matching capital funded directly or indirectly as debt.
b. Second, to pay management fees unless prohibited under this section.
c. Third, to pay any principal and interest on the SSBCI loan not deemed to be forgiven pursuant to paragraph (24)b. of Section 40-9H-2.
d. Fourth, to make distributions to its equity holders.
(Act 2021-492, §5; Act 2024-403, §1.)
Ala. Code § 40-9H-6 Growth Fund Reporting Requirements.
40-9H-6. Growth Fund Reporting Requirements.
(a) Each growth fund shall submit a report to the department on or before the fifth business day after the first anniversary of the closing date prior to program exit and include all of the following:
(1) A bank statement evidencing each growth investment.
(2) The name, location, and industry of each growth business receiving a growth investment, including the written opinion if provided by the department pursuant to subsection (b) of Section 40-9H-4.
(3) The number of high wage employment positions at each growth business on the date of the growth fund’s initial growth investment as evidenced on a payroll report certified by the growth business.
(b) Thereafter, if not previously provided pursuant to subsection (a), each growth fund shall submit a report to the department on or before April 15 of each year prior to program exit and include all of the following unless previously provided:
(1) A bank statement evidencing each growth investment.
(2) The name, location, and industry of each growth business receiving a growth investment, including the written opinion if provided by the department pursuant to subsection (b) of Section 40-9H-4.
(3) The number of high wage employment positions at each growth business on the date of the growth fund’s initial growth investment as evidenced on a payroll report certified by the growth business.
(4) The number of new annual jobs and jobs retained at each growth business as of December 31 of the prior calendar year as evidenced on a payroll report certified by the growth business.
(5) The average annual salary of the positions described in subdivisions (3) and (4).
(6) The cumulative amount of growth investments made in growth businesses.
(7) Financial statements for the preceding calendar year audited by an independent certified public accounting firm, which shall include an opinion of, or an agreed upon procedures letter issued by, the independent certified public accounting firm as to the growth fund’s compliance with the requirements of this chapter.
(8) The amount of follow-on capital attracted by the growth business as certified by the growth business.
(9) Any other information required by the department.
(10) A five thousand dollar ($5,000) annual fee.
(c) The growth fund shall use best efforts to obtain and provide information with respect to growth investments that have been redeemed or repaid as part of the annual report set forth in subsection (b) and shall provide the information if available.
(Act 2021-492, §6.)
Ala. Code § 40-9H-7 Department Reporting Requirements.
40-9H-7. Department Reporting Requirements.
The department shall report to the Legislature beginning in 2023, pursuant to Section 40-1-50 and rules adopted by the Department of Revenue, providing an assessment of the incentives allowed in this chapter.
(Act 2021-492, §7; Act 2024-403, §1.)
Ala. Code § 40-9H-8 Rulemaking Authority; Issuance of Forms and Notices.
40-9H-8. Rulemaking Authority; Issuance of Forms and Notices.
(a) The department may adopt rules to implement and administer this chapter.
(b) The department shall issue all forms and notices required by this chapter in accordance with the requirements of this chapter.
(Act 2021-492, §8.)
Ala. Code § 40-9H-9 Legislative Intent; Operation of Chapter.
40-9H-9. Legislative Intent; Operation of Chapter.
Under Subtitle C of Title III of the American Rescue Plan Act of 2021, the United States Treasury has been appropriated certain funds to use for the support of private businesses in each of the states. Each state is given the opportunity to apply for a certain amount of these funds, provided the funds are directly invested or used to support private enterprises pursuant to financing structures that are approved by the Treasury after application by the state. It is expected that the State of Alabama will be entitled to request more than twenty-five million dollars ($25,000,000) under this federal program. It is the intent of the Legislature that the program set forth in this chapter be included as part of the State of Alabama’s application to the United States Treasury as a Venture Capital Program, and if the application is approved, that the funds provided by the Treasury be used as set forth in this chapter. The Legislature notes that the program requires a dollar for dollar private capital match to the dollars invested by the Treasury, no reduction for administrative costs, and incentives to help ensure that the federal dollars are eventually leveraged on a ten-to-one basis. The provisions of this chapter shall not become operative until guidance is released by the United States Treasury regarding the State Small Business Credit Initiative pursuant to Subtitle C of Title III of the American Rescue Plan Act of 2021.
(Act 2021-492, §9; Act 2024-403, §1.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026