New Markets Tax Credit FAQs for Borrowers

Key Messages

Borrowers frequently ask about NMTC eligibility, benefits, and timing.
Eligibility depends on geography and sector priorities.
Benefits include reduced borrowing costs, loan forgiveness, and larger loan amounts.
NMTC financing requires early planning, often months or years before a project closes.
Learn about NMTC Benefits and NMTC Eligibility

The New Markets Tax Credit (NMTC) program is a unique financing tool that often raises questions from borrowers considering large community projects. While it offers important benefits, such as lower costs and partial loan forgiveness, eligibility and timing can be complex. This FAQ addresses the questions we hear most often from organizations exploring NMTC financing.

Is my project a good fit?

One of the most common questions borrowers ask is whether their project qualifies for NMTC financing. Eligibility depends largely on location and sector, both of which help determine how a project aligns with community investment priorities.

Geographic Priorities

Projects located in the following areas are often prioritized for NMTC financing from Capital Impact Partners:

Major metro areas in the states of California and Texas
The metro areas of Atlanta, Detroit, New York City, and Washington, D.C.

These markets typically combine high demand with opportunities for measurable community impact.

Sector Priorities

Common sectors that align with Capital Impact Partners’ NMTC program goals include:

Health care: Clinics and community health centers that expand access to quality primary and behavioral health services
Education: Charter schools and learning facilities that create quality options in communities with high needs
Multiservice facilities: Food banks, workforce training hubs, and supportive services that address multiple community needs

For example, in Atlanta, Capital Impact Partners used New Markets Tax Credit financing to support Heritage Village at Westlake, a 100 percent affordable housing development that also brings primary care and behavioral health services to a severely distressed community.

Affordable housing and health services project in Atlanta supported through New Markets Tax Credit financing. — Through New Markets Tax Credit (NMTC) financing, Capital Impact Partners supported Heritage Village at Westlake, a 100 percent affordable housing and health services project in Atlanta.

Curious how these benefits could support your project? Contact our NMTC experts today.

What are the benefits of NMTC financing?

Borrowers also ask what makes NMTC financing different from a conventional loan. Key benefits include:

NMTC proceeds fund up to 20% of project costs
Low interest rates
Loan forgiveness after year seven
Interest-only terms for 7 years
The ability to access larger loan amounts than traditional financing allows

These benefits provide stability and help projects cover full costs, which is particularly valuable for charter schools, health care centers, and multiservice community facilities.

When should I talk to lenders about NMTC financing?

Timing is another frequent question. Unlike conventional loans, NMTC financing requires early planning. Successful projects often begin conversations with lenders or NMTC allocatees months or even years before closing. This allows enough time to prepare documentation, align stakeholders, and be ready when allocation opportunities arise.

NMTC financing can unlock critical opportunities for community-serving projects, but it is not always straightforward. Understanding eligibility, benefits, and timing helps borrowers make informed decisions and prepare for success. With careful planning and the right guidance, NMTC financing can be the key to bringing ambitious projects to life.