• NEW MARKETS TAX CREDIT PROGRAM

Attracting Private Capital to Disinvested Communities

One of the persistent economic challenges that communities living with low incomes across the nation face is the lack of access to private investment capital for local business and real estate projects, especially in communities of color.

To overcome this hurdle, the New Markets Tax Credit Program (NMTC) was created by Congress and is administered by the U.S. Department of the Treasury’s Community Development Financial Institutions Fund.

This program helps mission-driven lenders like Capital Impact attract private investment capital to disinvested communities by providing individual and corporate investors a federal tax credit in exchange for making investments in businesses or economic development projects. This incentive bolsters our ability to provide loans to projects delivering social impact in communities across the country.

To date, Capital Impact has delivered nearly $690 million in New Markets Tax Credits to a wide variety of projects that have delivered social impact and created economic mobility and wealth creation.

We invite you to speak with our team to learn how we can utilize New Market Tax Credits to finance your project in underserved communities. Capital Impact is primarily focusing our tax credit allocation in support of health care and inclusive food system developments within our five core geographies. We can continue to provide leverage and sponsor loans in all of our focus sectors.

Advantages of utilizing the New Markets Tax Credit Program:

  • Specifically designed to finance projects in disinvested areas;
  • Flexible financing supports a variety of projects delivering social impact; 
  • Encourages private investment that enables multi-million-dollar financing deals;
  • Supports affordable loans with terms and conditions more favorable than the market typically offers. Terms can include interest-only payments, high loan-to-value ratios, and equity infusions into the project; and
  • Provides investors with federal tax credits as a result of program participation.

Advantages of borrowing through Capital Impact Partners:

  • Nearly two decades of experience structuring New Markets Tax Credit transactions;
  • Ability to provide multiple layers of financing for complicated deals, including source and leverage loans, as well as NMTC allocations;
  • Ability to offer a variety of financing options under terms not available through traditional financial institutions;
  • Since 1982, we have been a leader in mission-driven lending to developers and community organizations working in disinvested communities. We recognize the need to be intentional in crafting beneficial lending options with these communities and can help you get the most complicated transactions done.

 

How Do New Markets Tax Credits Work?

Graphic illustrating the process for how the New Markets Tax Credit Program Works

The CDFI Fund makes NMTC awards to certified Community Development Entities – like Capital Impact Partners – through a competitive application process. Here’s how the program works:

  1. A community development entity (CDE) submits an application to the CDFI Fund requesting the authority to allocate a specific dollar amount of tax credits.
  2. If its application is approved, the CDE is awarded the authority to allocate tax credits to an investor.
  3. The investor chosen by the CDE receives a tax credit totaling 39 percent of the cost of the investment. The investor can claim that tax credit over a period of seven years.
  4. In exchange for those tax credits, the investor makes a qualified equity investment (QEI) in the CDE.
  5. The CDE must use the QEIs it receives from the investor to finance businesses or real estate projects in communities living with low incomes, where the poverty rate is 20 percent or higher or the median income is 80 percent or lower than the Area Median Income. The CDE also has the option of investing in other CDEs making loans in areas with residents earning low incomes.
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At the end of the day, this isn’t my store; it belongs to the residents of the neighborhood. They deserve it, and we’re thankful for the help of Capital Impact.

Sam Shina
Imperial Fresh Market

See Sam's Project

STORIES OF IMPACT

Young boy plays in lobby at Unity Health Care
Filling the Gap for Washington, D.C.’s Uninsured
Unity Health Care – Washington, D.C.

Without health insurance, Michele Reynolds’ options for quality health care were limited. But that all changed when Unity Health Care built a brand new facility in Washington, D.C.’s Ward 5. This expanded access to care was made possible through a $12.5 million NMTC transaction facilitated between Capital Impact, U.S. Bancorp, and the Calvert Foundation.

Witness How Unity’s New Health Center is Transforming Lives

Young female shopper browses the produce section at Imperial Fresh Market
Nourishing the Neighborhood for 20 Years
Imperial Fresh Market – Detroit, MI

Amidst the economic turmoil facing Detroit, five brothers have continued to defy the odds for 20 years by expanding their grocery store…creating a healthy food investment in the neighborhood and expanding the inclusive food system for their neighbors. A big portion of the financing was facilitated through Capital Impact Partners’ ability to allocate $5.5 million in NMTC with JPMorgan Chase and Invest Detroit.

Stroll the Aisles of Imperial Fresh Market’s Healthy Offerings

Meals on Wheels volunteer delivers food to a neighbor
Delivering Healthy Food and Friends to Those in Need
Meals on Wheels – Tarrant County, Texas

Across North Central Texas, volunteers are supporting their neighbors by delivering hot meals…with a side of friendship. Capital Impact joined with JPMorgan Chase, Urban Action Community Development, and Community Hospitality Healthcare Services to put together a $15 million NMTC transaction to help expand these important connections.

Meet the Meals on Wheels Volunteers

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