Four Key Things to Consider When Seeking New Markets Tax Credit Financing.

New Markets Tax Credits (#NMTC) is a federal tax credit program designed to encourage investment in low-income communities. This program is administered by the Community Development Financial Institutions Fund (CDFI Fund), which is a department of the U.S. Treasury. The NMTC program provides tax credits to investors who make investments in qualifying community development entities (CDEs) that, in turn, make investments in low-income communities.

If your project is located in a low-income community and you are seeking funding, the NMTC program may be an excellent option to consider. However, before applying for NMTC financing, there are four key things that you should consider to maximize your chances of success.

Emerald Capital is a National Advisory firm specializing in New Markets Tax Credits that can help walk you through the entire process as your trusted advisor.

1.) Eligibility Requirements:

Before applying for NMTC financing, it is essential to understand the eligibility requirements for both the project and the CDE. Eligible projects must be located in low-income communities and meet certain economic and social criteria. Additionally, eligible CDEs must have a primary mission of serving low-income communities and must meet certain organizational and financial criteria. Emerald Capital will be able to assist you through these eligibility requirements.

2.) Project Structure:

The structure of your project can have a significant impact on your ability to obtain NMTC financing. For example, the NMTC program requires that investments be made in the form of equity or debt (often it is in the form of debt). Therefore, it is essential to consider the potential impact on the ownership structure of your project when pursuing NMTC financing. Emerald Capital will be able to structure project to be in alignment with the NMTC program but also advantageous to your specific goals.

3.) Investor and CDE Alignment:

Another critical consideration when pursuing NMTC financing is the alignment between your project, the CDE, and potential NMTC investors. Not all CDEs and Investors are alike and look for specific impacts such as Jobs (i.e. manufacturing), Services to the Community (i.e. Community Centers), Commercial Goods (i.e. Grocery Stores), Green Impacts to the community, etc. Investors will want to ensure that their investment aligns with their mission and values. Additionally, the CDE must have a strong understanding of the project and be able to effectively communicate the project's social and economic benefits to their board and the CDFI Fund. Emerald Capital will be able to work with you to ensure that we secure the right fit in aligning your project with the right Investor and CDE.

4.) Application Process:

The NMTC program application process can be complex and time-consuming. Therefore, it is essential to carefully review the application requirements and ensure that all necessary documentation is provided. It is also helpful to work with an experienced consultant or advisor such as Emerald Capital who has a strong understanding of the NMTC program and can provide guidance throughout the process.

In conclusion, the NMTC program can be an excellent option for projects located in low-income #communities seeking financing. However, before applying for NMTC financing, it is essential to carefully consider the eligibility requirements, project structure, investor and CDE alignment, and the application process. By doing so, you can maximize your chances of success and obtain the financing needed to make your project a reality. Please reach out to Emerald Capital to learn more about how we can help in your pursuit of NMTCs as well as other incentives.

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