Texas New Markets Tax Credit

The Texas NMTC program boosts brand-new ventures in low-income localities

The Texas New Markets Tax Credit program is a federal government aid tax plan designed to incentivize investments into low-income localities, offering approximately 25% of venture expenses in flexible, under market backing that is usually absolved at the end of the 7-year compliance time frame.
Texas NMTC

The Texas NMTC program incentivizes investments in distressed areas for economic rejuvenation

NMTC financiers make financial investments in companies called Community Development Entities (CDEs) that successively offer loans to organizations in low-income communities. The purpose of the program is to drive beneficial financial revitalization in these neighborhoods.

A CBO Financial Subsidiary, Community Development Funding, LLC was one of just 66 groups to receive NMTC allocation in Round 1 in 2003, and among 62 organizations to acquire an allowance in Round 2 - among only 10 groups to get both 1st and 2nd round allotments. Ever since, the CBO group has moved forward to receive increased allotments for our own CDE, and helped many clients with starting CDEs and effectively requesting a direct NMTC allowance award. NMTCs develop benefits to tax credit financiers, businesses that need to have capital, and state and city government and financial advancement bodies.

Texas New Market Tax Credits Lending Structure

Learn about the unique benefits to applicants, investors, and the US Economic Development Administration (EDA) from the NMTC Program.
Borrowers
Investors
States - Municipalities - EDAs
Build Communities in Texas

Borrower Benefits

  • Possible new or supplemental source of financing for approved clients in Texas
  • Supply funds where formerly unavailable in Texas
  • Lead to supply of capital in Texas at significantly lower cost than traditional lending institutions
  • Result in conversion of approximately 30% of Texas project debt to customer equity
Leverage Tax Credits in Texas

Texas Investor Benefits

  • Texas NMTC essentially guarantees return of financial investment plus a return on the financial investment no matter debtor performance
  • Texas Investors can even more increase investment return and Texas job subsidies with extra tax credits (e.g., historic and sustainable tax credits).
Facilitate Economic Revitalization in Texas

Public Benefits

  • Opportunity to integrate public financing with Texas tax credits to cause advancement.
  • Potential additional sources of profits to company as a CDE.
  • Prospective positive economic revitalization in these Texas locations.

Important considerations for NMTC financing for Texas

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Disadvantaged Zones in Texas

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

Eligible Texas New Markets Tax Credit Activities

Investments are made in the form of equity-like lending to companies located in low-income census systems or ones that primarily serve or primarily use low-income individuals.

This financing usually is applied as "space funding" for the advancement of industrial, industrial and retail property projects (consisting of neighborhood centers).

Other NMTC tasks may also consist of for-sale housing designated for moderate-to-low-income households, renewable technologies, and sustainable, environmentally friendly technologies running on a commercial scale.

Ways to Access Texas New Market Tax Credits

The Texas New Markets Tax Credit (NMTC) application was established 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 business and realty designers to invest in lower-income regions in Texas. A significant part of the application identifies whether the Texas location served by the development is low-income, or underserved in certain specific regards.

Fundamental qualification for the Texas NMTC plan calls for a property development to be in a census region with income at or lower than 80 percent area median earnings, or hardship to be higher than 20 percent. (Area typical earnings refers to the mean family earnings of the state, or if the system is in a Metropolitan Statistical Area with a higher typical family earnings than the state as an entire, the average family income of the MSA.).

CBO Financial distributes federal New Markets Tax Credits to vitalize retail areas, tidy up brownfield locations and strengthen financial investment in real estate, schools and neighborhood services in Texas.

 

There are two ways to gain access to the program. To money a single task, you will require to get CDEs that presently have an allotment and have an investment strategy that complements your organization model and geographic place.

If you have a rather large job or a pipeline of tasks in requirement of financing, the finest choice is to form a CDE and apply straight for an allocation of NMTCs.

Some Requirements that should be Be Met by the Borrower to be Accepted for New Market Tax Credits in Texas

The borrower should be a verified Active Low-Income neighborhood Business (QALICB), which is a company that fulfills the following qualifications:

  • It is a for profit corporation or nonprofit), or a partnership
  • It actively performs any operations excluding residential rental, property development, sale or licensing of intangibles, golf course, golf club, massage parlor, jacuzzi center, suntan center, racetrack, off-sale liquor
  • Less than 5% of its properties consist of "collectibles" (e.g., antiques, jewelry, white wine, and so on).
  • Fewer than 5% of its properties consist of "financial residential or commercial property" (e.g., stocks, bonds, cash other than reasonable operating capital).
  • 40% of its tangible assets are situated in a low-income neighborhood.
  • 40% of employee services are rendered in a low-income neighborhood.

More Details About Texas NMTC Programs

 

 

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