The U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) announced the awarding of $3.548 billion in New Markets Tax Credit (NMTC) allocations—bringing the total amount awarded through the NMTC program to $61 billion.
According to a Treasury CDFI Fund release, the NMTC awards were made to 76 community development entities made through the calendar year 2019 round of the NMTC program. The award recipients are headquartered in 30 different states and the District of Columbia, and it is estimated that these award recipients will make more than $706 million in NMTC investments in non-metropolitan counties.
Read the list of entities known as Community Development Entities (CDEs) awarded NMTC allocations in the NMTC award book [PDF 5.31 MB]
Historically, NMTC awards have generated $8 of private investment for every dollar invested by the federal government. Through the end of fiscal year 2018 (the most recent data available), NMTC program award recipients deployed approximately $52.5 in investments in low-income communities and businesses—resulting in the creation or retention of more than 836,000 jobs, and the construction or rehabilitation of more than 218.3 million square feet of commercial real estate.
The NMTC program allows an investor a tax credit against its federal income taxes for making qualified equity investments (QEIs) in CDEs.
The Treasury Department allocates the NMTCs to the CDEs that, in turn, make qualifying investments (generally loans) to businesses located in low-income communities. The NMTC totals 39% of the cost of the QEI in the CDE and is claimed over a seven-year credit period. Investors in leveraged NMTC transactions can increase their tax benefit by pooling borrowed funds with their cash investments to receive tax credits on the full amount of their investment. Qualified businesses benefit from favorable NMTC financing terms and the potential for partial debt forgiveness after the end of the NMTC period.
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