Kentucky New Markets Tax Credit

The Kentucky NMTC plan promotes unique property investments in low-income areas

The Kentucky New Markets Tax Credit program is a federal government subsidization solution developed to incentivize investment decisions into low-income localities, producing roughly 25% of plan fees in adaptable, under market backing that is normally eliminated at the end of the 7-year compliance time period.
Kentucky New Markets Tax Credit

The Kentucky NMTC program promotes financial investments in low-income neighborhoods for financial revitalization

NMTC investors make investment decisions in organizations identified as Community Development Entities (CDEs) which in turn generate funds to organizations in low-income neighborhoods. The purpose of the program is to spark positive financial revitalization in these locations.

A CBO Financial Subsidiary, Community Development Funding, LLC was among only 66 groups to earn NMTC allotment in Round 1 in 2003, and one of 62 teams to be given an allotment in Round 2 - among only 10 organizations to get both 1st and 2nd round allotments. Since then, the CBO team has carried on to secure additional allocations for our own CDE, and assisted a wide range of clients with developing CDEs and proficiently making an application for a direct NMTC allocation award. NMTCs create perks to tax credit investors, businesses that are in need of capital, and state and city government and economic development bodies.

Kentucky NMTC Program Structure

Review the different perks to recipients, investors, and the US Economic Development Administration (EDA) from the New Markets Tax Credit Plan.
States - Municipalities - EDAs
Build Communities in Kentucky

Borrower Benefits

  • Potential new or additional source of working capital for certified customers in Kentucky
  • Supply financing where previously not available in Kentucky
  • Lead to accessibility of working capital in Kentucky at significantly lower expense than standard lenders
  • Lead to conversion of as much as 30% of Kentucky venture financial obligation to customer equity
Leverage Tax Credits in Kentucky

Kentucky Investor Benefits

  • Kentucky NMTC essentially guarantees return of investment plus a return on the financial investment despite borrower efficiency
  • Kentucky Investors can further increase financial investment return and Kentucky job aids with extra tax credits (e.g., historical and eco-friendly tax credits).
Facilitate Economic Revitalization in Kentucky

Public Benefits

  • Opportunity to integrate public financing with Kentucky tax credits to induce development.
  • Prospective additional sources of revenue to company as a CDE.
  • Potential favorable financial revitalization in these Kentucky locations.

Important points to consider for NMTC Programs credits for Kentucky

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Disadvantaged Regions in Kentucky

A low-income neighborhood is a census area with at least 20% poverty, or one that has a typical household income that is at or listed below 80% of the area's mean family earnings.

Eligible Kentucky NMTC Program Funding

Investments are made in the kind of equity-like loans to organizations located in low-income census tracts or ones that mainly serve or primarily use low-income individuals.

This funding normally is used as "gap financing" for the advancement of commercial, industrial and retail real estate projects (including community centers).

Other NMTC tasks might likewise include for-sale housing designated for moderate-to-low-income households, eco-friendly innovations, and sustainable, eco-friendly technologies running on an industrial scale.

How to Use NMTCs in Kentucky

The Kentucky New Markets Tax Credit (NMTC) application was made by the CDFI Fund, and CBO Financial can help you identify how well your application will be considered.

The New Markets Tax Credit program is a federal tax credit that incentivizes service and genuine estate developers to invest in lower-income areas in Kentucky. A huge part of the application identifies whether the Kentucky area served by the advancement is low-income, or underserved in particular distinct ways.

Fundamental approval for the Kentucky NMTC plan needs a property development to be in a census zone with income at or lower than 80 percent area mean earnings, or hardship to be higher than 20 percent. (Area average income refers to the average household earnings of the state, or if the system is in a Metropolitan Statistical Area with a higher average family earnings than the state as a whole, the median family earnings of the MSA.).

CBO Financial syndicates federal New Markets Tax Credits to stimulate retail passages, tidy up brownfield areas and enhance financial commitment in real estate, schools and area services in Kentucky.


There are two methods to connect to the program. To fund a single job, you will require to solicit CDEs that currently have an allocation and have an investment method that complements your organization model and geographic location.

If you have a rather large task or a pipeline of projects in need of financing, the very best option is to form a CDE and apply directly for an allowance of NMTCs.

Key Requirements that should be Be Completed by the Borrower to be Approved for New Markets Tax Credit in Kentucky

The recipient needs to be a verified Active Low-Income Community organization (QALICB), which is a business that meets the list below conditions:

  • The borrower is is a for profit corporation or not-for-profit), or a partnership
  • It proactively carries out any business aside from residential rental, projects, sale or licensing of intangibles, golf course, golf club, massage parlor, jacuzzi center, suntan center, racetrack, off-sale liquor
  • Less than 5% of its possessions include "collectibles" (e.g., antiques, precious jewelry, wine, etc).
  • Less than 5% of its properties consist of "financial home" (e.g., stocks, bonds, cash aside from sensible operating capital).
  • 40% of its tangible assets are situated in a low-income community.
  • 40% of worker services are rendered in a low-income community.

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