Kentucky small business grants, loans and training funds (2026)

What Kentucky’s $117 million SSBCI share does and does not pay for

The U.S. Treasury is distributing $117 million to Kentucky under SSBCI 2.0 over 10 years. The Cabinet sends 70% of it to equity investment and 30% to loan support ⁠¹. Two arms of the state handle it:

• The Kentucky Economic Development Finance Authority (KEDFA) runs the two loan programs, the Kentucky Loan Participation Program (KYLPP) and the Kentucky Collateral Support Program (KYCSP) ⁠²⁠³.
• Keyhorse Capital, the seed-stage venture firm of the Kentucky Science and Technology Corporation, invests the equity share ⁠¹⁠⁴.

A KYLPP or KYCSP loan is repaid in full, and a Keyhorse investment buys shares in your company. The state takes on part of the risk so a deal that would otherwise be declined can close.

How KEDFA’s loan participation and collateral support change a bank’s answer

Both loan programs follow February 2023 guidelines and share the same eligibility rules. The borrower and its affiliates must have 500 or fewer employees when the loan is enrolled. All proceeds must be spent in Kentucky. Eligible uses include start-up costs, working capital, franchise fees, equipment, inventory and a place of business you occupy. Passive real estate, speculative ventures, gambling-dependent businesses and cannabis businesses are excluded ⁠²⁠³.

Any commitment over $1,000,000 for a single borrower needs approval at a KEDFA board meeting ⁠²⁠³.

The 50% tier reaches more Kentucky businesses than its labels suggest. A “very small business” has fewer than 10 employees, counting sole proprietors and independent contractors. The definition of SEDI-owned includes owners with long-term residence in a rural community, residents of communities going through economic transition, and businesses located in CDFI Investment Areas. A “disaster relief affected business” is one in a county declared a disaster area on or after December 1, 2021 ⁠². You still need to qualify for the loan: owners of 20% or more must give guarantees, the lender alone makes the credit decision ⁠², and a lender cannot use KSBCI to refinance its own existing loan to you ⁠³.

KEDFA also lends directly through its Small Business Loan program. Loans run from $15,000 to $100,000 on 3- to 10-year terms and can cover up to 100% of a project. The borrower must have 50 or fewer employees, work in manufacturing, agribusiness or service and technology, and create one new full-time job within a year of closing ⁠¹². This, too, is a loan you repay.

Keyhorse Capital: the equity side of KSBCI

Keyhorse invests KSBCI 2.0 equity in technology companies with fewer than 500 employees that are raising money through equity or convertible debt and already have customer traction ⁠⁴. It can invest up to $5 million in one company. It will not put in more than 50% of any round, rounds are capped at $20 million, and private investors must commit at least as much as the fund. Your company must have its principal operations in Kentucky, keep at least half its property and payroll in the state, or commit to meeting those terms within 30 days of the investment ⁠⁴. Founders apply through the “Apply to Pitch” form on Keyhorse’s site.

Bluegrass State Skills Corporation training grants and their 2026-27 deadlines

The Bluegrass State Skills Corporation (BSSC) runs Kentucky’s employer training grant, the Grant-in-Aid (GIA), alongside a tax-credit version, the Skills Training Investment Credit (STIC). For fiscal 2026-2027, each award is the lesser of 50% of approved training costs, $75,000, or $2,000 per eligible trainee ⁠⁵. The GIA pays cash after the training is finished and documented. The STIC is claimed on your Kentucky tax return, and unused credit carries forward three years ⁠⁵.

Eligibility depends on the industry. BSSC covers manufacturing, agribusiness, nonretail service or technology serving mostly out-of-state customers, headquarters, hospitals, coal, alternative fuel and renewable energy, and CO2 or hydrogen pipelines. It excludes retail, construction, wholesale, real estate, accommodation and food service, utilities, forestry and fishing ⁠⁵. Trainees must be full-time Kentucky residents earning at least $16.68 an hour in total compensation in a Heritage County, or $25.01 elsewhere ⁠⁵. An application must include at least $12,000 in planned training costs, which equals $6,000 in potential incentive, and it must score at least 70 points. A company with 100 or fewer employees earns 20 points for size alone ⁠⁵. Training that starts before the board approves it is not eligible.

BSSC approved more than $9.5 million for 112 applicants in fiscal 2026 ⁠⁶. Each FEIN can be approved at only one board meeting per fiscal year, so put all your training in one application ⁠⁵.

Credits and matches tied to hiring and R&D

The Kentucky Small Business Tax Credit (KSBTC) is the hiring incentive that retail and service businesses can use, since BSSC excludes them ⁠⁹. It works as a tax credit, not a cash grant. To qualify, a for-profit business with 50 or fewer full-time employees must do two things within the 24 months before it applies. It must create and fill at least one new full-time position (35+ hours a week) above its base employment, paying at least 150% of the federal minimum wage. It must also invest at least $5,000 in equipment or technology approved by the Office of Entrepreneurship and Innovation ⁠⁹⁠¹⁰. The Cabinet lists the wage floor as $10.88 an hour. The new job has to last 12 months, and a departing employee must be replaced within 45 days ⁠¹⁰. Credits run from $3,500 to $25,000 a year, and the Cabinet reports an average award of $14,870 ⁠⁹. The credit is nonrefundable and carries forward five years. The statewide cap is $3 million a year, shared with the Selling Farmer Tax Credit ⁠¹⁰.

The SBIR/STTR Matching Funds Program is Kentucky’s only true innovation grant. KY Innovation matches up to $100,000 of a federal Phase I award and up to $150,000 of a Phase II award. Awards are competitive and reimbursable, and you must be a for-profit federal SBIR/STTR awardee based in Kentucky or willing to move there ⁠⁷. On July 30, 2026, six companies received $748,620 in state matches on top of $5.9 million in federal awards ⁠⁸. The program page lists no Phase 0 grant for preparing a federal proposal ⁠⁷. Win the federal award first, then email [email protected].

STEP FY 25: up to $15,000 for exporters until funds run out

Kentucky’s State Trade Expansion Program grant reimburses up to $15,000 per business for SBA-approved export activities between June 30, 2026 and September 29, 2027 ⁠¹¹. Eligible costs include U.S. Commercial Service programs such as Gold Key, international trade show booths and travel for up to two employees, website translation, compliance testing and export credit insurance. Wages, product samples, basic website development and rental cars are not covered ⁠¹¹.

To apply, your business must be for-profit and meet SBA size standards. It must have been operating in Kentucky for at least one year and already be selling the product in the U.S. through a findable website. The goods must have at least 51% U.S. content. Consulting, real estate, legal, education, financial, tourism and staffing firms are excluded ⁠¹¹. Kentucky awards funds first come, first served until they are spent, and every activity must be approved by email before you pay for it. The only exception is trade show booth fees paid up to 12 months before the show ⁠¹¹.

Farm and food businesses: the Kentucky Agricultural Development Fund

Agricultural businesses can also turn to the Kentucky Agricultural Development Fund (KADF), paid for with Kentucky’s 1998 tobacco settlement dollars. The Kentucky Agricultural Development Board meets monthly and awards state and county funds for agricultural diversification projects. Remaining 2026 application deadlines are October 23 (for the November 20 meeting) and November 30 (for the December 18 meeting) ⁠¹³. The board weighs producer impact: on December 19, 2025 it approved $653,688, declined a Louisville grocery for limited producer impact, and pointed a dairy processor to a Kentucky Agricultural Finance Corporation loan instead ⁠¹³. Farmers apply for County Agricultural Investment Program (CAIP) cost-share through their county council, which advertises its own application windows ⁠¹³.

Working the Kentucky system: SBDC first, then the lender or agency

1. Book free coaching with the Kentucky SBDC

   Call 1-888-414-7232 or submit the online request. The University of Kentucky’s Martin-Gatton College of Agriculture, Food, and Environment runs the network, with 12 regional locations from Paducah to Eastern Kentucky ⁠¹⁴. Bring projections, tax returns and the amount you need.

2. Ask your bank, credit union or CDFI about KSBCI

   You do not apply to the state. The enrolled lender approves the loan and then submits it to KEDFA. If you have fewer than 10 employees, operate in a rural or disaster-declared county, or meet another SEDI category, ask for the 50% tier and be ready to document it ⁠²⁠³.

3. Call the Cabinet about KEDFA’s direct loan

   at 800-626-2930 if you are a manufacturer, agribusiness or tech firm with 50 or fewer employees and plan to add a job ⁠¹².

4. File the BSSC application before training starts

   Download the GIA/STIC workbook, list each trainee’s wage and planned courses, register in the state’s Vendor Self Service system, and submit by December 15, 2026 to be heard on February 3, 2027 ⁠⁵.

5. Claim the KSBTC after the new job has lasted a year

   Gather payroll records showing your base employment and the new hire, plus invoices for the $5,000 equipment purchase, and send the KSBTC application to [email protected] ⁠⁹.

6. Exporters: email the three STEP forms

   (eligibility, export readiness assessment and application) to [email protected] with #encrypt in the subject line. Wait for your award letter before you book anything ⁠¹¹.

7. If you are turned down, ask why and reroute

   A KSBCI decision is the lender’s credit call, so another enrolled lender may decide differently. A BSSC application that scores under 70 is returned, and you can revise it for the next quarterly deadline ⁠⁵. KADF applicants are often pointed to a loan instead ⁠¹³.

To compare Kentucky with other states, see the small business grants hub.