*Provided by CDFI Fund
Through the NMTC Program, the CDFI Fund allocates tax credit authority to Community Development Entities (CDEs) through a competitive application process. CDEs are financial intermediaries through which investment 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. With these capital investments, CDEs can make loans and investments to businesses operating in distressed areas that have better rates and terms and more flexible features than the market. The NMTC Program helps to offset the perceived or real risk of investing in distressed and low-income communities. In exchange for investing in CDEs, investors claim a tax credit worth 39 percent of their original CDE equity stake, which is claimed over a seven-year period. In addition to receiving a tax benefit, investors have the advantage of entering new, unsaturated markets before their competitors, thereby increasing their chances of success. The NMTC Program enables investors to gain recognition for supporting the revitalization of America’s communities.
NMTC PROGRAM HISTORY:
- In the 15 rounds to date, the CDFI Fund has made 1,178 allocation awards totaling $57.5 billion in tax credit authority, including
- $3 billion in Recovery Act awards and
- $1 billion that was specifically set aside for recovery and redevelopment in the wake of Hurricane Katrina
- $49 billion in New Markets Tax Credits have been invested in low-income communities since the program’s inception through FY 2018.
For full report, click here