New Market Tax Credit (NMTC) Overview
A little known source of funds, the NMTC program can help
Nevada businesses and nonprofit organizations gain access to gap
funding to support businesses located in
economically distressed communities. The
NMTC program has developed a public-private partnership to attract private
investment on terms that may otherwise be unavailable to these communities.
How does the program work? For the federal NMTC program, the U.S. Department of the
Treasury certifies specialized financial intermediaries called Community Development
Entities (CDEs). These entities are
allocated federal tax credits to incentivize private capital to invest in
ventures in distressed or disadvantaged communities. For their investment, the private investors
receive a tax credit against their federal income tax liability through the
IRS. Similarly, the Nevada NMTC program allocates insurance premium tax credits to CDEs for investment in these same low-income census tracts.
It is important to note that, despite the implication of the
name, the businesses receiving the investment do NOT receive tax credits;
however, they do receive favorable terms and potential benefits that help their
business acquire the necessary cash to thrive and grow in otherwise challenging
locations. Generally speaking, NMTC funds
fill the gap by contributing approximately 25% of a project’s total funding
package. The funding currently available to organizations in Nevada include:
NMTC – This program funds projects requiring over $5,000,000 in total equity
and funding. The CDFI recently allocated
an additional $7 billion to support
- Nevada NMTC
– This program funds projects from $300,000 to $3 million and up. During the 2019 Legislative session, lawmakers approved another round of $200 million in allocation which is now ready for investment into business and nonprofit ventures.
- City of Las Vegas NMTC - for more information, visit www.lasvegasnevada.gov/Business/Economic-Development/Business-Incentives.
To be eligible to apply for NMTC, and organization must meet the following criteria:
- Must be located in a designated low-income community. Click here to check if your current or prospective location will qualify
- Must meet the SBA small business size standards
- A substantial proportion of the business activity must be contained within a low-income zone
- The funds cannot be invested in the following: a massage parlor, bath house or hot tub facility, tanning salon, country club, liquor store, golf course, gambling facility, holding of intangibles for sale, or certain farming businesses
- No more than the 15% of the business revenue can be generated through retail or housing rental
If you are ready to discuss your project with a Nevada New Market Tax Credit investor, review the list of CDE's that received NMTC allocation and contact them directly. The list of allocatees can be found on the right-hand side of this page under NMTC Funding Resources.