The New Markets Tax Credit (NMTC) Program drives private investment into underserved communities throughout Alabama. From the manufacturing corridors of the Tennessee Valley to Birmingham’s innovation districts, Mobile’s port facilities, and rural development zones across the Black Belt, CBO Financial partners with developers, manufacturers, and community organizations to deliver financing solutions that create jobs and strengthen Alabama’s economic foundation.
Alabama’s persistent poverty in rural counties and economically distressed urban neighborhoods creates significant opportunities for deploying tax credits. The program addresses the fundamental gap between project costs and available conventional financing by providing a federal tax credit equal to 39% of the qualified equity investment over seven years. This subsidy makes financially feasible projects that would otherwise remain unrealized, delivering critical infrastructure, employment opportunities, and services to communities that need them most.
How the NMTC Program Works in Alabama
The NMTC Program incentivizes private capital investment by providing federal tax credits to investors who support qualified businesses and real estate projects in designated low-income census tracts. Community Development Entities (CDEs) certified by the U.S. Treasury’s CDFI Fund receive allocation authority to deploy tax credit equity into qualifying projects. When an investor makes a Qualified Equity Investment in a CDE, that entity uses the capital to provide loans or equity investments to Qualified Active Low-Income Community Businesses (QALICBs) located in eligible census tracts.
In Alabama, this financing structure has proven particularly effective in revitalizing downtown commercial districts, expanding manufacturing capacity in former textile mill communities, supporting healthcare infrastructure in medically underserved rural areas, and developing mixed-use projects that bring retail and services back to disinvested neighborhoods. The state’s diverse economy—spanning aerospace manufacturing, automotive production, biotechnology, agribusiness, and logistics—creates numerous opportunities that address critical community needs while supporting Alabama’s competitive advantages.
For a comprehensive understanding of how these transactions work, explore our new market tax credit program overview and federal requirements.
Eligible Projects and Borrowers
NMTC financing in Alabama supports diverse community development initiatives across multiple sectors.
Commercial and Industrial Projects include manufacturing facility expansions and equipment upgrades, food processing and cold storage operations, distribution centers and logistics facilities, and technology incubators supporting entrepreneurship and small business growth.
Healthcare and Education projects address critical access gaps through community health clinics and rural medical facilities, charter schools and early childhood education centers, and workforce training facilities preparing Alabama residents for careers in advanced manufacturing, healthcare, and skilled trades.
Mixed-use and Community Facilities combine downtown revitalization projects, historic preservation initiatives, fresh-food retail in food-desert areas, community centers providing social services, and affordable commercial space for small businesses.
Eligible borrowers include for-profit businesses, nonprofit organizations, real estate developers, and community facilities serving qualified low-income communities. Projects must be located in qualifying census tracts and demonstrate measurable community benefit through job creation, service provision to low-income populations, or economic revitalization of distressed neighborhoods.
CBO Financial offers comprehensive CDFI financing that extends beyond NMTC, including layered capital structures that combine tax credit equity with conventional debt and other community development resources. Our team provides NMTC advisory services to help borrowers navigate the qualification process, identify appropriate CDEs, and structure optimal transactions.
Benefits of the NMTC Program for Alabama
The NMTC Program delivers substantial economic benefits to Alabama communities:
Capital Access: Projects receive below-market financing that bridges the gap between total project costs and conventional available funding. In distressed communities where property values and revenues remain depressed, this capital subsidy—approximately 20% of the qualified equity investment after fees—often represents the difference between project realization and abandonment.
Job Creation: NMTC-financed projects consistently generate quality employment opportunities in communities with elevated unemployment rates, supporting Alabama’s workforce development goals. Manufacturing expansions, commercial developments, and service facilities create direct jobs while generating indirect employment through supply chain relationships and induced economic activity.
Community Revitalization: Strategic investments catalyze broader neighborhood improvements, attract additional private investment, and reverse decades of disinvestment. Physical improvements change neighborhood character, improve community pride, and encourage property owners to invest in enhancements they previously deferred.
Business Growth: Small- and mid-sized businesses gain access to capital for expansion that would otherwise be unavailable, enabling them to scale operations, upgrade technology, and compete more effectively. Conventional lenders often decline financing for projects in distressed areas due to perceived market risk. Still, NMTC’s patient capital structure allows CDEs to approve transactions that demonstrate community benefit and reasonable prospects for success.
Multiplier Effect: Every dollar of NMTC allocation typically leverages additional private investment, amplifying the program’s impact on local economies. Economic impact analyses consistently demonstrate that NMTC projects generate tax revenues, employment, and economic activity exceeding the federal revenue cost of the tax credit.
Whether you’re expanding an existing operation or launching a new community facility, CBO Financial can assess your project’s NMTC eligibility and structure a financing solution tailored to your needs. Schedule a consultation to explore your options.
Regulatory & State Development Framework
Alabama’s economic development ecosystem actively supports projects that align with NMTC objectives. The Alabama Department of Commerce serves as the state’s lead economic development agency, offering competitive business incentives and coordinating with local development authorities across key sectors. The Department administers programs such as the Alabama Jobs Act and Growing Alabama, which provide incentives for projects in economically distressed areas that often layer effectively with NMTC financing.
The Alabama Department of Economic and Community Affairs (ADECA) administers grant and loan programs focused on infrastructure, workforce development, and community facilities. ADECA’s Community Development Block Grant (CDBG) program provides funding for infrastructure improvements that support NMTC-financed projects. In contrast, the Department’s industrial access road funding supports transportation infrastructure connecting facilities to highway networks.
Alabama is home to UB Community Development, the only Community Development Entity headquartered in Alabama to receive federal NMTC allocation authority. With a focus on rural economic development, UBCD demonstrates the state’s commitment to channeling tax credit equity into projects serving distressed communities throughout Alabama and the Florida Panhandle.
CBO Financial maintains strong relationships with CDEs that hold NMTC allocations and specializes in ensuring full compliance with both Treasury CDFI Fund regulations and Alabama state requirements. Our team coordinates with local economic development authorities to maximize available incentives and streamline project approvals.
Get Started with NMTC Financing in Alabama
Ready to explore how New Markets Tax Credits can make your Alabama project financially viable? CBO Financial’s experienced team will evaluate your project’s eligibility, identify optimal CDEs and investors, and structure a transaction that maximizes community impact while meeting your development objectives.
From initial feasibility assessment through closing and compliance monitoring, we provide comprehensive support throughout the NMTC process. Contact us today to discover how strategic community development finance can transform your vision into reality.