Colorado State Grants and Tax Incentives Explained

When it comes to funding startups in rural Colorado, entrepreneurs don’t need to do it all on their own. There are no guarantees, but there is plenty of opportunity for financial boosts that don’t require repayment, negotiating equity, or giving away a stake in your company.

Colorado is regularly ranked among the top 10 best states for small businesses, in no small part due to the guidance and resources provided by the Colorado Office of Economic Development and International Trade (OEDIT).

While OEDIT serves the entire state, two of its top-tier objectives are directly pertinent to rural startups. The first stated goal of the office is to attract and retain rural jobs. A second is to provide support for small businesses through increasing access to capital and providing technical assistance. Both of these goals are supported by OEDIT’s dedicated Rural Opportunity Office.

That’s just one of 14 specialized divisions in OEDIT, each focused on different channels of economic growth in the state. Independently and in coordination, these divisions are resources for grants, tax incentives, and other funding options. (See “resources” below for links.)

Below we’ll cover some Colorado-specific grants and tax incentives that help businesses grow or relocate to the state. While most are offered through the State, we’ve thrown in a few other closely-aligned opportunities. Be sure to research other opportunities in the broader funding landscape, too.

Understanding Grants and Tax Incentives

Grants and tax incentives are especially valuable during the startup and growth phases. Grants don’t need to be repaid. Tax incentives not only keep capital within the businesses, they can also help inform fundamental decisions, like: location, job creation, and capital investments. It’s wise to be thorough in understanding each specific opportunity, however, because they often come with parameters and post-award responsibilities.

piggy bank

What is a grant?

Grants are typically monetary awards that do not require repayment. They are offered by government agencies, at the federal, state, and local levels, as well as by private organizations and corporations. Non-monetary grants are direct donations of assets or services that benefit a business, like land, equipment, or consulting services.

Grant Pros & Cons​

Pros:

  • Grants are awarded outright, with no repayment
  • Some grants are sizable in dollar amount
  • Depending on the source, some grants provide access to higher visibility and PR–as the providers typically want to promote their awardees
  • Many grants are designed to help level the playing field for people traditionally under-represented in the startup realm

Cons:

  • Grants are notoriously competitive
  • Writing grant proposals can be time-consuming and may require hiring a specialist
  • Many grants dictate how the money can be spent
  • Be aware that both monetary and non-monetary grants may be considered taxable income
  • If awarded, grants often require extensive report-outs and data. This can be requested on a monthly basis, but is usually quarterly or annually.
Julia Taylor, GeekPack
Julia Taylor, Founder of GeekPack

Hot Tip: Julia Taylor, founder and CEO of GeekPack, recommends repurposing successful grant language. After a few unsuccessful proposals, she hired a professional grant writer and voilà: It worked! Now when pressed for time or money, she pulls the most effective language from the winning proposal and updates it for new opportunities.

For most founders, applying for a grant is absolutely worth the effort. Before jumping in, understand all the requirements from start to finish and vet those through the specific lens of your business needs and development.

What are tax incentives? ​

Tax incentives are offered by local, state or federal government entities to encourage certain types of business development, job creation and retention, or other measures of economic fitness. They may be deductions, exemptions, or credits toward what a business would otherwise owe in tax payments.

Tax Incentive Pros and Cons

From the business owner’s perspective, there are few downsides to taking advantage of tax incentives. The biggest hurdles are knowing what’s available, determining if a business qualifies, and monitoring that the business remains eligible. It’s a good idea to meet with an accountant and tax planner to ensure your business remains eligible throughout the year and for long-term responsibilities.

Grants and Tax Incentives in Tandem

Yes! Grants and tax incentives can, for the most part, be accessed in tandem to multiply their effect. Just be sure to read eligibility rules thoroughly and inquire with OEDIT and other relevant agencies to uncover any potential conflicts.