The New Markets Tax Credit (NMTC) program was developed by the Federal Government to incentivize private investment into businesses in low-income communities. To see if NMTCs may work for financing your business, please review the questions below.
What is a typical NMTC funding project size?
A typical NMTC funding request is between $8 and$50 million, though the total project size may be larger. An NMTC financing request of more than $20 million typically requires the participation of multiple NMTC awardees.
What kind of business can be funded with NMTCs?
NMTCs are very flexible and can be used for almost any kind of business, with the following exceptions:
- Private or commercial golf courses;
- Country clubs;
- Massage parlors;
- Hot Tub facilities;
- Suntan facilities;
- Racetrack or other facility used for gambling;
- A store whose principle business is the sale of alcoholic beverages for consumption off-premises;
- Farms; or
- Any trade or business consisting predominantly of the development or holding of intangibles for sale or license.
Additionally, less than 80% of gross income must come from rental of dwelling units, and a portion of any residential rental units may be required to be reserved for low-income residents.
Are there any limitations on where my business can be located?
To receive NMTC-funding, a business must either be located in a Federally-defined low-income census tract or the business1 must serve low-income individuals2 in one of the following three ways:
- 50% of the business’s total gross income for any taxable year must be derived from sales, rentals, services or other transactions with low-income individuals;
- 40% of the business’s employees must be low income individuals at time of hire; or
- 50% of the business must be owned by a low-income individual.
What type of funding is available through the NMTC program?
The majority of NMTC financing is delivered as debt, though equity or equity-equivalent financing may be available in special circumstances.
What is the benefit of NMTC-financing to my business?
Most NMTC-funded businesses receive financing that involves more favorable terms and conditions than those the market typically offers and may include some of the following:
- Below market interest rates (or rate of return in the case of equity investments);
- A longer than standard period of interest only loan payments;
- Higher than standard loan to value ratio;
- A longer than standard amortization period ;
- More flexible borrower credit standards;
- Nontraditional forms of collateral ;
- Lower than standard debt service coverage ratio; or
Why should I work with CEI Capital Management LLC (CCML)?
As the largest NMTC awardee in the country with over 10 years of experience, CCML is recognized as an industry leader in the NMTC field. Our skilled Investment Team has the expertise to guide you to closing, and our professional Asset Management, Compliance, and Accounting Teams will see you through the life of your NMTC financing.
Does CCML have any special requirements I should know about?
CCML will only fund projects that support the mission of CEI (our Parent company) and adhere to CEI’s Triple-E or Triple-Bottom-Line underwriting criteria. Additionally, outside of its home state of Maine, CCML targets NMTC investments to rural or non-metropolitan communities.
How do I apply?
- Project Name
- Physical Street Address, State and/or Specific Census Tract(s) Location
- Total Project Size or Budget
- Specific NMTC Allocation Amount Requested
- Status of Any Other Necessary NMTC Allocation
- Status of Any Necessary Leverage Debt
- Project Description
- Summary of Anticipated Direct and Indirect Job Creation and/or Preservation
- Summary of Other Key Community Impacts
- Overview of Industry Sector
- Summary of Key Management or Personnel
- Preferred Closing Date or Deadline
1 The business must generally be located in a census tract for which the median family income does not exceed 120% of the applicable area median family income.
2 Individuals whose family income is not more than 80% of the area median family income.