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Opportunity for USA Community Development Entities to Provide Federal Tax Credits to Investors in Low-Income Communities

IMPORTANT DATES:

Conference Date

12/01/22

Intent to Apply Date

12/02/22

Application Deadline

01/26/23 5:00 PM ET Receipt

See more info
ELIGIBILITY:

Geographic Focus

USA: AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew York CityNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashington, DCWashingtonWest VirginiaWisconsinWyoming

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New Markets Tax Credit (NMTC) Program

United States Department of the Treasury - Community Development Financial Institutions Fund


Agency: Federal

GrantWatch ID #146449

Grant Description

Opportunity for USA Community Development Entities to provide investors in low-income communities with tax credits. Uncertified applicants must submit a certification application prior to applying. The tax credits awarded provide a credit against federal income taxes for investors that make Qualified Equity Investments in these Community Development Entities, which are certified financial intermediaries. The purpose of the program is to encourage economic growth and community development in underserved communities.

The New Markets Tax Credit Program (NMTC Program) helps economically distressed communities attract private capital by providing investors with a Federal tax credit. Investments made through the NMTC Program are used to finance businesses, breathing new life into neglected, underserved low-income communities.

Through the Program, the CDFI Fund allocates tax credit authority to Community Development Entities (CDEs) through a competitive application process. CDEs are financial intermediaries through which private capital flows from an investor to a qualified business located in a low-income community. CDEs use their authority to offer tax credits to investors in exchange for equity in the CDE. Using the capital from these equity investments, CDEs can make loans and investments to businesses operating in low-income communities on better rates and terms and more flexible features than the market.

The NMTC Program has supported a wide range of businesses including manufacturing, food, retail, housing, health, technology, energy, education, and childcare. Communities benefit from the jobs associated with these investments, as well as greater access to community facilities and commercial goods and services.

The NMTC Program helps businesses with access to financing that is flexible and affordable. Investment decisions are made at the community level, and typically 94 to 96 percent of NMTC investments into businesses involve more favorable terms and conditions than the market typically offers. Terms can include lower interest rates, flexible provisions such as subordinated debt, lower origination fees, higher loan-to-values, lower debt coverage ratios and longer maturities.

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Eligibility:

  • Others (see text field entitled "Additional Eligibility Criteria" for clarification)

Additional Eligibility Criteria:

Community Development Entities (CDEs)* or organizations with a pending CDE certification application are eligible to apply for an NMTC allocation. Only a certified CDE that has been awarded an allocation of MTCs can offer NMTCs for sale to investors. If awarded an NMTC allocation, CDEs must issue QEIs within 5 years of receiving an allocation.

*A Community Development Entity (CDE) is a domestic corporation or partnership that is an intermediary vehicle or the provision of loans, investments, or financial counseling in Low-Income Communities. To qualify as a CDE, a domestic corporation or partnership must apply for and receive certification from the CDFI Fund.

For more information on CDE Certification, please see https://www.cdfifund.gov/programs-training/programs/new-markets-tax-credit/cde-certification-step and https://www.cdfifund.gov/programs-training/certification/cde.

Ineligible:

Activities ineligible for NMTC Investment:

1. Residential rental property
- Buildings or structures that derive 80% or more of their gross rental income from renting dwelling units.
2. Certain Types of Businesses:
- Golf courses
- Massage Parlors
- Race tracks
- Hot tub facilities
- Gambling facilities
- Suntan facilities
- Certain farming businesses
- Country clubs
- Stores where the principal business is the sale of alcoholic beverages for consumption off premises

Refer to IRS regulations for additional details.

Pre-proposal Conference:

The CDFI Fund will conduct a one-hour long webinar to answer application questions on Thursday, December 1, 2022 at 3:00 pm Eastern Time.

In order to ensure the webinar is an effective and efficient use of time, the CDFI Fund is asking participants to submit questions by Tuesday, November 29, 2022 via a service request in AMIS (https://amis.cdfifund.gov/AMISHome?ec=302&startURL=%2Fs%2FAMISHome).

Viewing this webinar requires the use of WebEx. To download the WebEx Desktop Application, please see the instructions on the WebEx Downloads page at https://www.mymeetings.com/netconferencing/WBS33.6.4_Plug-Ins_11-27-2018.php. No prior registration is necessary.

Requests for reasonable accommodations under section 504 of the Rehabilitation Act should be directed to Jay Santiago at 202-653-0300 no later than 48 hours before the conference calls begin.

Access Details:

Call-In: (888)-790-1783
Webinar Access: https://www.mymeetings.com/nc/join/
Conference Number: PWXW2958651
Audience Passcode: 1226186

Pre-Application Information:

Timeline:
- November 18, 2022 Allocation Round Opens
- November 22, 2022 NOAA Published
- December 2, 2022 Submission of CDE Certification Application
- December 2, 2022 Online Submission of Subsidiary CDE Certification Application for QEI Issuance and QLICI Requirements Deadline
- December 15, 2022 ​Application Registration Deadline
- January 24, 2023 Last Day the CDFI Fund Will Answer Questions About the Application
- January 26, 2023a ​Online Submission of Allocation Application
- May 4, 2023 QEI Issuance and QLICI Requirements Deadline for Prior Allocatees
- Fall 2023 ​NMTC Program Awards Announced

The Application Process includes 5 steps:
- Certification
- Apply
- Award Announcement
- Allocation Agreement Closing
- Compliance and Reporting

The CDFI Fund previously recorded a webinar to demonstrate the electronic application’s features and the submission process in AMIS. Applicants should also use the NMTC Program Application - AMIS Navigation Guide (listed in Supporting Documents below) as a reference when completing the NMTC Program Application in AMIS.

NMTC Program Application Registration Demonstration: https://youtu.be/5Jw_tVVJXZU

NMTC Program AMIS Application Demonstration: https://www.youtube.com/watch?v=xxk8i3DvEeU

Certification process: https://www.cdfifund.gov/programs-training/programs/new-markets-tax-credit/cde-certification-step

Application process: https://www.cdfifund.gov/programs-training/programs/new-markets-tax-credit/apply-step,

Additional Funding Information:

Estimated Size of Grant:

In exchange for investing in CDEs, investors claim a tax credit worth 39% of their original CDE equity stake - 5% of the original investment amount in each of the first three years, and 6% of the original investment amount in each of the final four years.

Term of Contract:

The New Markets Tax Credit is claimed over a 7-year period.

Contact Information:

AMIS application system: https://amis.cdfifund.gov/s/AMISHome

Questions regarding New Markets Tax Credit Program may be directed to the CDFI Fund by e-mail to cdfihelp@cdfi.treas.gov; or by phone to (202) 653-0421. (Please note this is not a toll free number.)

For technical support, please direct any questions to the CDFI Fund's Help Desk at 202-653-0421 option 3, cdfihelp@cdfi.treas.gov.

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