Since its inception in 2000, the NMTC has secured billions of dollars in funding for projects in economically distressed communities. The effort has created more than a million jobs and financed more than 6,500 projects across all 50 states, the District of Columbia, and Puerto Rico.
5 steps to funding a community project
- CDEs apply for certification from the CDFI Fund.
- Once certified, CDEs apply for NMTC Allocation Authority from the CDFI Fund.
The CDFI Fund has a limited allocation each year. Only about 1/4 of applications—which are evaluated on the community impact, business strategy, capitalization strategy, and management strategy—are approved.
- CDEs that receive allocation authority raise private funds to invest in qualified projects.
- Private investors make a Qualified Equity Investment in exchange for a 39% tax credit over 7 years.5
NMTC investors typically receive an average annual after-tax return of 3% – 5%.6
- The credit typically funds about 25% of a qualifying project's total cost—with owner equity, borrowed funds, or other grants and credits making up the remaining 75%.
Qualified projects must invest in a low-income community—that is, where the poverty rate is 20% or higher or the median income is less than 80% of an area's median income.5
Moving Forward Act.
This $1.5 trillion investment in infrastructure would expand the NMTC and make it permanent, eliminating the needs for extensions. (The current extension expires in 2025.) The bill passed by a large, bipartisan margin in the House and was received in the Senate in July 2020.
- Manufacturing/industrial (83)
- Health care facility (36)
- Projects supporting childcare, youth, and families (29)
- Mixed-use (26)
- Grocery stores/healthy foods (17)
- Nonprofit hubs and multipurpose social services campuses (16)
- Retail, restaurants, and service sector (13)
- Other miscellaneous small businesses and office space (12)
- Schools (11)
- Museums, theaters, arts, and culture (10)
- Other miscellaneous community facility and nonprofit projects (10)
- College or vocational training (9)
- Business incubators and entrepreneurial research space (9)
- Hotels and tourism (4)
- Housing (3)
In the wake of the COVID-19 pandemic and recession, corporations are looking to attract capital to underserved communities. Now more than ever, there's a push to revitalize neighborhoods, offer employment opportunities to residents, and jump-start small businesses. Consider whether the NMTC Program may be a good option for your next investment.
How can NMTC efforts benefit your community?
To learn more, reach out to your community Truist relationship manager.