The New Markets Tax Credit (NMTC) Program drives essential investment throughout Tennessee’s economically diverse communities. From Memphis’s urban neighborhoods to Nashville’s opportunity zones, from Knoxville’s revitalizing corridors to Chattanooga’s innovation districts, NMTC financing unlocks capital for transformative projects in areas where conventional lending remains insufficient. CBO Financial collaborates with Tennessee developers, automotive manufacturers, healthcare systems, advanced manufacturers, and community organizations to structure comprehensive financing solutions that strengthen the Volunteer State’s economy while addressing persistent challenges in rural Appalachian communities, the Mississippi Delta region, and urban neighborhoods experiencing economic transition.
Tennessee’s dynamic economy—characterized by automotive manufacturing, healthcare and life sciences, logistics and distribution, advanced manufacturing, music and entertainment, tourism, and agriculture—creates exceptional opportunities for NMTC deployment. The program provides a 39% federal tax credit to investors who deploy capital in qualified low-income communities, substantially reducing borrowing costs and enabling projects that serve critical community needs. Whether you’re expanding automotive supply chain operations serving Nissan, General Motors, or Volkswagen facilities, developing healthcare infrastructure in rural counties, creating mixed-use developments in Memphis or Chattanooga, or building advanced manufacturing facilities along the I-40 or I-65 corridors, NMTC financing delivers the capital advantage necessary for project success.
How the NMTC Program Works in Tennessee
The NMTC Program operates through certified Community Development Entities (CDEs) authorized by the U.S. Treasury’s CDFI Fund to make Qualified Low-Income Community Investments (QLICIs) throughout Tennessee. Projects must be located in census tracts where the poverty rate exceeds 20% or the median family income falls below 80% of the area median. Investors providing equity to CDEs receive tax credits totaling 39% over seven years—5% annually for the first three years and 6% annually for the subsequent four years.
Tennessee contains extensive eligible geography across its metropolitan areas, smaller cities, and rural communities. Memphis, the state’s largest metro area, features numerous qualifying census tracts throughout the city. Nashville, Knoxville, and Chattanooga contain substantial eligible areas despite their overall economic growth. Mid-size towns, including Jackson, Clarksville, Murfreesboro, and Johnson City, include significant eligible geography. Rural Tennessee—particularly Appalachian counties in the eastern region, Mississippi Delta counties in the west, and counties throughout Middle Tennessee—presents widespread NMTC opportunities due to manufacturing job losses, agricultural transition, limited economic diversification, and persistent poverty.
The program supports sectors central to Tennessee’s economic priorities: automotive supply chain manufacturing, healthcare and life sciences facilities, advanced manufacturing operations, distribution and logistics facilities leveraging Tennessee’s strategic location, technology and innovation spaces, food processing and agricultural value-chain facilities, music and entertainment industry infrastructure, tourism facilities, and mixed-use urban developments. CBO Financial connects Tennessee projects with regional and national CDEs, navigating compliance requirements while ensuring projects advance NMTC project objectives aligned with state economic development strategies.
Eligible Projects and Borrowers
Tennessee projects eligible for NMTC financing address critical infrastructure and economic development needs across the state’s diverse regions. Automotive supply chain projects represent a firm fit given Tennessee’s concentration of automotive assembly and tier-one suppliers. Parts manufacturing facilities, tooling operations, automotive components production, plastic injection molding operations, and logistics facilities supporting the automotive cluster all qualify when located in eligible census tracts and create accessible employment opportunities. Tennessee’s automotive ecosystem—anchored by Nissan in Smyrna and Decherd, General Motors Spring Hill Assembly, and Volkswagen in Chattanooga—creates substantial supply chain opportunities for NMTC-financed operations.
Healthcare infrastructure projects remain critically important given disparities in healthcare access between urban centers and rural communities. Hospital expansions and modernizations, federally qualified health centers, specialty clinics, behavioral health facilities, substance abuse treatment centers, rural health clinics, and urgent care centers all qualify when serving underserved populations. Tennessee’s challenges with maternal mortality, rural healthcare provider shortages, and opioid addiction make healthcare facilities particularly compelling NMTC candidates.
Advanced manufacturing facilities, including aerospace components, chemical production, machinery manufacturing, plastics and rubber products, and metal fabrication operations, qualify when demonstrating job creation in low-income communities. Distribution and logistics facilities leverage Tennessee’s strategic location and absence of state income tax. Warehousing operations, fulfillment centers, cold storage facilities, and intermodal logistics operations qualify when creating jobs in low-income communities.
Food processing and agricultural infrastructure projects support Tennessee’s agrarian economy. Meat processing operations, produce packing and distribution, specialty food production, dairy processing, and value-added agrarian facilities qualify for NMTC support. Technology and innovation spaces—including business incubators, accelerators, coworking facilities, and research centers—qualify when spurring economic development in transitioning communities.
The music and entertainment industry infrastructure leverages Tennessee’s position as a global music center. Recording studios, live music venues, entertainment facilities, and tourism support infrastructure qualify when located in eligible census tracts and serving community development objectives. Tourism facilities, including hotels in underserved areas, cultural centers, museums, and heritage sites, support Tennessee’s tourism economy.
Educational facilities such as charter schools, early childhood education centers, STEM learning facilities, and workforce training centers address academic needs and qualify for financing. Downtown revitalization projects in cities like Jackson, Clarksville, Johnson City, Kingsport, Morristown, and Cookeville leverage NMTC to transform underutilized properties into vibrant mixed-use developments.
Historic building rehabilitation in Tennessee’s older communities creates modern commercial space while preserving character. Combining state and federal historic tax credits with NMTC provides powerful financial structures for adaptive reuse projects.
Eligible borrowers include for-profit businesses, nonprofit organizations, and local government entities developing qualified projects. The borrower must demonstrate substantial service to low-income communities and prove that NMTC financing is essential to project feasibility. CBO Financial creates comprehensive capital stacks leveraging CDFI grant resources that combine NMTC with conventional debt, equity, Tennessee Department of Economic and Community Development incentives, local incentives, historic tax credits, and other complementary funding sources optimized for Tennessee’s development environment.
Benefits of the NMTC Program for Tennessee
The NMTC Program delivers substantial economic benefits to Tennessee communities while providing borrowers with competitive financing terms. The 39% tax credit significantly reduces effective capital costs, often enabling projects to achieve debt service coverage ratios that satisfy lenders while maintaining operational sustainability. For capital-intensive projects common in Tennessee—automotive manufacturing facilities, healthcare campuses, distribution centers, and advanced manufacturing plants—this cost reduction frequently determines project viability.
Beyond financial mechanics, NMTC investments generate measurable community impact aligned with Tennessee’s development priorities. Job creation remains a central metric, with projects committing to create or retain positions accessible to low-income individuals. In Tennessee’s distressed communities—whether in Memphis neighborhoods, Appalachian counties, Mississippi Delta communities, or rural areas—quality job creation carries substantial importance for reducing poverty and providing economic opportunity.
NMTC projects catalyze significant private investment—each allocation dollar typically attracts multiple additional capital dollars, multiplying the program’s economic multiplier effect. This leverage proves especially important in Tennessee’s rural counties and transitioning communities where individual projects can substantially impact local economies. A manufacturing facility creating 300 jobs in a rural county or a mixed-use development anchoring downtown revitalization in a mid-size city represents a transformative investment at the community scale.
Tennessee’s rural Appalachian communities particularly benefit from NMTC’s capacity to finance projects serving essential community needs despite challenging market conditions. Healthcare facilities in underserved counties, advanced manufacturing operations diversifying local economies, technology centers connecting rural areas to digital opportunities, and downtown revitalization projects become feasible through NMTC’s cost reduction.
The program provides patient capital with flexible repayment structures. Unlike conventional loans requiring immediate full debt service, NMTC transactions often feature interest-only periods during initial years, allowing projects to stabilize operations before principal payments commence. This flexibility proves valuable for projects with extended lease-up periods or those ramping up manufacturing operations. To evaluate your Tennessee project’s NMTC potential, begin your free project analysis with CBO Financial’s experienced team.
Regulatory & State Development Framework
Tennessee’s robust economic development infrastructure strongly supports NMTC deployment through comprehensive state and local programs. The Tennessee Department of Economic and Community Development (TNECD) administers numerous incentive programs that complement NMTC financing, including the FastTrack Economic Development Fund, FastTrack Job Training Assistance Program, Industrial Machinery Tax Credit, and various industry-specific initiatives. Understanding how to layer these state incentives with federal NMTC benefits can dramatically enhance project economics.
Local governments in Tennessee offer additional incentives through payment-in-lieu-of-tax (PILOT) agreements, tax increment financing, and other local programs. Tennessee’s strong home rule tradition means municipalities have substantial authority over local economic development incentives, and coordination with city and county officials is essential for maximizing benefits.
The Tennessee Valley Authority (TVA) provides resources, including site selection assistance, energy incentives, and economic development support, that may complement NMTC transactions in its service territory covering most of Tennessee. For projects involving historic preservation, the state historic tax credit program provides financial benefits when combined with federal historic credits and NMTC.
Regional economic development organizations—including the Greater Memphis Chamber, Nashville Area Chamber of Commerce, Knoxville Chamber, Chattanooga Area Chamber of Commerce, and various county and municipal development entities—provide project support and help navigate local incentive programs. Launch Tennessee supports entrepreneurship and innovation projects statewide.
The Appalachian Regional Commission (ARC) provides grants and financing for projects in Tennessee’s 50 Appalachian counties, creating opportunities to layer ARC funding with NMTC for projects in East Tennessee and portions of Middle Tennessee. For agricultural projects, the Tennessee Department of Agriculture can provide connections and technical assistance.
Tennessee’s technical and community colleges provide workforce training through the Tennessee Colleges of Applied Technology (TCAT) system, adding value to manufacturing and other projects requiring skilled workers. The state’s nationally recognized workforce development programs strengthen project feasibility.
CBO Financial ensures projects meet both federal NMTC compliance requirements and Tennessee’s state and local regulatory frameworks. We coordinate timing between NMTC closing schedules, TNECD incentive applications, local PILOT negotiations, environmental reviews, and historic preservation reviews where applicable. Our understanding of Tennessee’s local economic development dynamics and relationships with regional development organizations streamlines project execution across the state’s diverse markets.
Get Started with NMTC Financing in Tennessee
If you’re developing a project in a Tennessee low-income community—whether in Memphis, Nashville, Knoxville, or Chattanooga’s urban neighborhoods, rural Appalachian counties, Mississippi Delta communities, or along major transportation corridors—NMTC financing merits thorough evaluation. The program’s capacity to reduce capital costs while attracting impact-focused investment to underserved areas makes it uniquely powerful for addressing Tennessee’s development challenges, particularly supporting automotive supply chain growth, rural healthcare access, and economic diversification in transitioning communities.
CBO Financial’s approach begins with a comprehensive project assessment: verifying census tract eligibility, analyzing community impact potential, evaluating NMTC suitability relative to Tennessee’s numerous state and local incentive programs, and identifying optimal CDE partners. We then develop customized capital stacks that may combine NMTC with conventional debt, equity investments, TNECD incentives, local PILOT agreements, historic tax credits, ARC funding for Appalachian projects, and other complementary sources.
Tennessee clients benefit from our established relationships with CDEs, tax credit investors, and lenders highly active in the state’s competitive markets. We understand Tennessee’s unique development context—the automotive cluster’s supply chain opportunities, the healthcare sector’s growth trajectory, the logistics advantages from central location and infrastructure, the challenges facing rural Appalachian communities, and the nuances of local economic development dynamics across the state’s diverse regions. This Tennessee-specific expertise increases NMTC allocation success rates and streamlines transaction execution.
Project size shouldn’t discourage NMTC exploration. Tennessee transactions range from $3 million projects in rural communities to $150 million developments in major metros, all successfully closing using sophisticated structuring approaches. Early engagement with experienced advisors who understand both NMTC mechanics and Tennessee’s specific development environment maximizes success potential. Connect with new market tax credit consultants and guidelines professionals at CBO Financial today to discover how NMTC can transform your Tennessee community development vision into reality.