Puerto Rico New Markets Tax Credits

The Puerto Rico NMTC funds energizes new financial investments in low-income areas

The Puerto Rico New Markets Tax Credit program is a US federal government aid tax plan designed to incentivize investments into low-income localities, providing around 25% of project fees in adjustable, under market lending that is typically eliminated at the end of the 7-year compliance time period.
Puerto Rico NMTC

The Puerto Rico NMTC program motivates financial commitments in low-income neighborhoods for financial revitalization

NMTC investors make investment decisions in companies identified as Community Development Entities (CDEs) that subsequently offer loans to businesses in low-income areas. The intent of the plan is to spur desirable economic revitalization in these neighborhoods.

A CBO Financial Subsidiary, Community Development Funding, LLC was among just 66 organizations to receive NMTC allocation in Round 1 in 2003, and among 62 groups to get an allotment in Round 2 - one of just 10 companies to get both 1st and 2nd round allotments. Since then, the CBO team has advanced to receive even more allowances for our own CDE, and assisted a wide range of clients with establishing CDEs and successfully applying for a direct NMTC allowance award. NMTCs produce advantages to tax credit financiers, businesses that require capital, and state and city government and economic advancement authorities.

Puerto Rico New Market Tax Credits Program Structure

Discover the specific benefits to recipients, investors, and the US Economic Development Administration (EDA) from the NMTC Plan.
Borrowers
Investors
States - Municipalities - EDAs
Build Communities in Puerto Rico

Borrower Benefits

  • Possible brand-new or supplementary source of working capital for qualified borrowers in Puerto Rico
  • Offer working capital when previously not available in Puerto Rico
  • Result in accessibility of financing in Puerto Rico at significantly lower cost than traditional lending institutions
  • Lead to conversion of approximately 30% of Puerto Rico venture debt to borrower equity
Leverage Tax Credits in Puerto Rico

Puerto Rico Investor Benefits

  • Puerto Rico NMTC basically guarantees return of financial investment plus a return on the investment no matter borrower efficiency
  • Puerto Rico Investors can further increase investment return and Puerto Rico project subsidies with additional tax credits (e.g., historic and sustainable tax credits).
Facilitate Economic Revitalization in Puerto Rico

Public Benefits

  • Chance to integrate public financing with Puerto Rico tax credits to cause advancement.
  • Potential extra sources of profits to firm as a CDE.
  • Prospective positive financial revitalization in these Puerto Rico areas.

Meaningful considerations for New Market Tax Credits funding for Puerto Rico

Our experts is available to help you with any concerns you may have. Feel free to send a Free Project Analysis Request for more comprehensive information relating to your unique circumstances.

Low-Income Puerto Rico Regions

A low-income neighborhood is a demographic area with at least 20% hardship, or one that has an average family income that is at or listed below 80% of the location's average family income.

Qualifying Puerto Rico NMTC Activities

Investments are made in the form of equity-like lending to companies situated in low-income census systems or ones that predominantly serve or mainly employ low-income persons.

This funding normally is used as "space financing" for the advancement of industrial, industrial and retail realty jobs (consisting of community facilities).

Other NMTC jobs may also consist of for-sale real estate designated for moderate-to-low-income families, renewable technologies, and sustainable, eco-friendly technologies operating on an industrial scale.

How to Access Puerto Rico NMTCs

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

The New Markets Tax Credit program is a federal tax credit that incentivizes organization and realty designers to invest in lower-income communities in Puerto Rico. A major part of the application determines whether the Puerto Rico location served by the advancement is low-income, or underserved in particular distinct manners.

Basic qualification for the Puerto Rico NMTC program entails a development to be in a census tract with earnings at or lower than 80 percent location average income, or poverty to be higher than 20 percent. (Area typical income refers to the mean family earnings of the state, or if the tract is in a Metropolitan Statistical Area with a higher average household income than the state as a whole, the typical household income of the MSA.).

CBO Financial distributes federal New Markets Tax Credits to stimulate retail corridors, clean up brownfield locations and reinforce investment projects in real estate, schools and neighborhood services in Puerto Rico.

 

There are two methods to gain access to the program. To money a single task, you will require to obtain CDEs that currently have an allowance and have an investment strategy that matches your organization design and geographical location.

If you have a rather big job or a pipeline of projects in need of financing, the finest choice is to form a CDE and use directly for an allotment of NMTCs.

Some Conditions that should be Be Completed by the Investor to be Accepted for Puerto Rico NMTCs

The borrower needs to be a verified Active Low-Income Community company (QALICB), which is a company that satisfies the list below prerequisites:

  • The borrower is is a corporation for profit or not-for-profit), or a collaboration
  • It proactively conducts any operations with the exception of residential rental, property development, sale or licensing of intangibles, golf course, golf club, massage parlor, jacuzzi facility, suntan center, racetrack, off-sale liquor
  • Fewer than 5% of its assets include "antiques" (e.g., antiques, fashion jewelry, white wine, etc).
  • Less than 5% of its properties consist of "monetary residential or commercial property" (e.g., stocks, bonds, cash other than affordable operating capital).
  • 40% of its tangible possessions are located in a low-income community.
  • 40% of staff member services are conducted in a low-income community.

More Information Puerto Rico NMTC Programs

 

 

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