New Markets Tax Credits
for Infrastructure Purposes

The NMTC for Infrastructure Purposes plan boosts brand-new investment decisions in low-income localities

The Infrastructure Purposes New Markets Tax Credit program is a federal subsidization program made to incentivize investment decisions into low-income neighborhoods, providing approximately 25% of project fees in flexible, below market funding that is normally absolved at the end of the 7-year compliance period of time.

The Infrastructure Purposes NMTC program promotes financial commitments in low-income communities for economic rejuvenation

NMTC investors make financial commitments in companies called Community Development Entities (CDEs) which in turn create financing to organizations in low-income neighborhoods. The aim of the program is to spur constructive economic revitalization in these locations.

A CBO Financial Subsidiary, Community Development Funding, LLC was one of only 66 teams to be given NMTC allowance in Round 1 in 2003, and among 62 groups to acquire an allotment in Round 2 - among only ten companies to get both 1st and 2nd round allocations. Because then, the CBO team has actually carried on to acquire extra allocations for our own CDE, and aided multiple clients with creating CDEs and effectively looking for a direct NMTC allotment award. NMTCs create benefits to tax credit investors, companies that require capital, and state and city government and financial development authorities.

Important considerations for NMTC lending for Infrastructure Purposes

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Infrastructure Purposes in a Troubled Zone

A low-income community is a census region with at least 20% poverty, or one that has a mean household income that is at or listed below 80% of the zone's average family income.

Qualifying Infrastructure Purposes New Market Tax Credits Investments

Investments are made in the kind of equity-like loans to businesses found in low-income census tracts or ones that primarily serve or mainly utilize low-income persons.

This financing normally is applied as "gap funding" for the development of industrial, commercial and retail genuine estate projects (consisting of community facilities).

Other NMTC projects may also include for-sale real estate designated for moderate-to-low-income households, renewable technologies, and sustainable, ecologically friendly technologies running on an industrial scale.

Process to Qualify for New Market Tax Credits for Infrastructure Purposes?

There are two methods to connect to the program. To fund a single project, you will require to solicit CDEs that presently have an allocation and have a financial investment strategy that matches your organization model and geographical area.

If you have a relatively large job or a pipeline of tasks in need of financing, the finest option is to form a CDE and apply straight for an allowance of NMTCs.

Important Prerequisites Have to Be Completed by the Client to Qualify for Infrastructure Purposes NMTC?

The recipient must be a Qualified Active Low-Income Community company (QALICB), which is an organization that meets the following criteria:

  • It is a for profit corporation or not-for-profit), or a collaboration
  • It proactively carries out any business excluding residential rental, projects, sale or licensing of intangibles, golf course, golf club, massage parlor, hot tub center, suntan facility, racetrack, off-sale liquor
  • Fewer than 5% of its assets consist of "antiques" (e.g., antiques, precious jewelry, red wine, and so on).
  • Less than 5% of its properties include "monetary residential or commercial property" (e.g., stocks, bonds, money other than reasonable operating capital).
  • 40% of its tangible properties lie in a low-income community.
  • 40% of employee services are provided in a low-income community.

More Details Regarding Infrastructure Purposes

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