New Market Tax Credits (NMTCs) support economic development across diverse business sectors, yet specific industries demonstrate powerful alignment with program objectives and consistently secure substantial financing allocations. Understanding which industries benefit most from NMTCs and why these sectors prove especially suitable enables businesses to assess whether their sector positions them favorably for NMTC financing.
The Framework for Industry Suitability
The Community Development Financial Institutions (CDFI) Fund evaluates Community Development Entities (CDEs) in part on their ability to deploy capital into businesses that generate substantial community benefit, particularly job creation for low-income community residents and the provision of essential services addressing critical needs.
Industries that require significant capital investment in facilities or equipment, create substantial employment opportunities, provide services that address community needs, operate successfully in low-income communities despite conventional lenders’ reluctance, and demonstrate sustainable business models naturally align with NMTC program objectives.
Healthcare: The Dominant Beneficiary (20-25% of Allocations)
Healthcare consistently ranks as the largest NMTC recipient industry, capturing approximately 20% to 25% of all allocations in typical years. This dominance reflects multiple factors making healthcare exceptionally well-suited for NMTC financing.
Federally Qualified Health Centers (FQHCs) represent the quintessential NMTC recipient, providing primary care, dental services, behavioral health, and preventive care to underserved populations regardless of ability to pay. These community health centers address critical gaps in healthcare access in low-income communities where private physicians often refuse to practice. FQHCs require substantial capital for facility construction or renovation, medical equipment, health information technology systems, and operational infrastructure.
NMTC financing enables FQHCs to construct modern facilities rivaling private clinics in quality and amenities, helping attract talented providers. The stable revenue streams from federal Section 330 grants, Medicaid reimbursement, and private insurance provide financial profiles that support debt service.
Community hospitals and critical access hospitals in rural or urban low-income areas leverage NMTC financing for facility expansions, equipment modernization, and service line development. Specialty healthcare facilities, including dental clinics, vision centers, dialysis facilities, mental health treatment centers, substance abuse recovery programs, and rehabilitation facilities, all successfully access NMTC financing.
Manufacturing: Job Creation Powerhouse (15-20% of Allocations)
Manufacturing ranks second among NMTC recipients, typically capturing 15% to 20% of allocations. This sector’s prominence reflects its capacity for substantial direct job creation—often 50 to 300 positions per project—plus multiplier effects through supplier relationships and indirect economic impact.
Food and beverage manufacturing operations leverage NMTC financing for production facilities, processing equipment, cold storage infrastructure, and distribution capacity. These businesses often locate in low-income communities to access labor pools and reduce transportation costs. Advanced manufacturing, including aerospace components, medical devices, precision machining, electronics assembly, and technology hardware production, utilizes NMTC financing for sophisticated facilities and specialized equipment costing millions of dollars.
Traditional manufacturing, including furniture, textiles, metal fabrication, plastics, and industrial products, continues receiving NMTC support, particularly when businesses commit to workforce development partnerships, local hiring, and living wages.
Commercial Real Estate: Community Infrastructure (10-15% of Allocations)
Commercial real estate projects capture approximately 10% to 15% of NMTC allocations, focusing on developments that create community infrastructure. Mixed-use developments combining retail, office, and sometimes residential components revitalize struggling commercial corridors, transforming vacant or underutilized properties into economic anchors.
Grocery-anchored retail centers addressing food deserts represent particularly compelling NMTC projects, combining essential service provision with substantial employment and commercial corridor revitalization. Office developments housing professional service businesses, nonprofit organizations, or corporate operations create employment opportunities in communities often lacking quality workspace. Industrial and flex space developments provide affordable space for small manufacturers, distributors, and business service providers.
Education: Building Human Capital (8-12% of Allocations)
Educational facilities capture approximately 8% to 12% of NMTC allocations, recognizing education’s fundamental role in economic mobility and community development. Charter schools represent the largest educational subsector receiving NMTC support, with hundreds of schools having financed facilities through the program.
Early childhood education centers and daycare facilities address critical needs for working parents while providing early learning opportunities. The childcare sector particularly benefits from NMTC financing due to challenging economics—high family costs combined with low provider profit margins. Vocational training centers, career and technical education programs, and workforce development facilities directly connect education to employment, aligning perfectly with NMTC’s economic development objectives.
Community Facilities: Addressing Diverse Needs
Community facilities representing various purposes collectively capture significant NMTC allocation shares. Recreation centers, YMCAs, Boys & Girls Clubs, and similar facilities providing youth programming, fitness opportunities, and community gathering spaces address social needs while creating employment opportunities.
Arts and cultural facilities, including theaters, museums, cultural centers, and performance venues, preserve cultural heritage and provide entertainment and educational programming. Social service facilities, housing, food banks, homeless services, job training, legal aid, and other support programs address critical needs among vulnerable populations.
Technology and Innovation: Emerging Opportunities
Technology businesses remain underrepresented in NMTC allocations relative to the sector’s economic importance. However, growing recognition of technology’s role in modern economic development has increased funding for data centers, telecommunications infrastructure, technology incubators, and software development operations in low-income communities.
Data centers provide high-speed internet access while employing technical personnel. Telecommunications infrastructure projects expand broadband access, which is essential for modern economic participation. Technology incubators and accelerators nurture startup businesses by providing workspace, mentorship, and access to capital.
Industries With Limited NMTC Success
Specific industries rarely receive NMTC financing due to program restrictions or poor alignment with objectives. Prohibited activities, including private golf courses, country clubs, gambling facilities, liquor stores, and massage parlors, face statutory exclusion. Purely residential real estate doesn’t qualify except as subordinate components of mixed-use developments.
Professional services, financial services, and other office-based businesses without substantial community service missions struggle to demonstrate sufficient community benefit to justify NMTC allocation. Retail businesses beyond grocery stores face skepticism about whether commercial operations serving primarily market-rate customers merit a subsidy.
Industry Selection Implications for Applicants
Understanding industry trends helps project sponsors realistically assess their NMTC prospects. Businesses in heavily supported sectors like healthcare or manufacturing should emphasize industry-typical benefits while differentiating their specific projects. Businesses in less commonly supported sectors must work harder to demonstrate exceptional community benefit, job creation, or critical service provision.
CDEs often develop industry specialization, building expertise and relationships in healthcare, manufacturing, or real estate. Identifying CDEs with a track record in your industry significantly improves application prospects.
While NMTCs theoretically support any qualifying business in low-income communities, practical allocation patterns reveal strong industry preferences. Healthcare dominates due to clear access benefits and stable economics; manufacturing thrives through employment generation; commercial real estate creates lasting infrastructure; education builds human capital; and community facilities address diverse needs. For expert guidance on positioning your industry for NMTC success, explore our NMTC advisory services, review industry-specific projects in our project portfolio, or request a free project analysis to evaluate your competitive positioning.