New Markets Tax Credit (NMTC) Eligibility: Which Projects Qualify

The New Markets Tax Credit (NMTC) program is designed to direct investment to communities that often lack access to affordable development financing. To ensure impact, eligibility is shaped by where projects are located and the types of services they provide. While federal rules set the framework, understanding typical priorities can help borrowers assess whether NMTC financing may be a good fit.

Geographic Priorities

One of the most important elements of NMTC eligibility is location since a project’s census tract must meet eligibility criteria in order to benefit from NMTCs. Capital Impact Partners’ NMTC allocations go to projects in the following regions:

• Major metro areas in California and Texas
• Atlanta region
• Detroit region
• DC-Maryland-Virginia region
• New York City region

These markets are often prioritized because they combine high demand with opportunities for measurable community impact. Borrowers planning projects in metro areas should consider NMTC financing as a potential option.

Sector Priorities

New Markets Tax Credit (NMTC) prioritization is also guided by the type of project. Capital Impact Partners prioritizes community-serving sectors, with health care centers, charter schools, and multiservice facilities such as food banks, job training hubs, and housing service centers, among the most common. For example, education projects often use NMTC financing to build or expand charter school campuses, while health care centers leverage it to modernize or build clinical facilities. One example is YouthBuild Newark in New Jersey, where Capital Impact Partners provided $7.5 million in Source Loan financing and a $5 million NMTC allocation. This support enabled LEAD Charter School to relocate and expand under one roof with YouthBuild Newark, increasing its ability to serve students who had previously been disconnected from traditional education pathways. 

Project Readiness & Impact

While geographies and sectors create a strong starting point, every NMTC allocatee must meet specific requirements. Factors such as project readiness, financial sustainability, and anticipated community outcomes can make a difference in whether a project ultimately secures NMTC support. For borrowers, the key is to begin planning early, assemble documentation, and understand both general program guidelines and the expectations of potential financing partners.

New Markets Tax Credit financing can be a powerful tool, but not every project will qualify. By focusing on location, sector, and readiness, borrowers can determine if their project aligns with common eligibility standards. Early preparation increases the chances of success and ensures that organizations are ready to move forward when opportunities arise.