The healthcare industry continues to benefit from participation in the New Markets Tax Credit (NMTC) Program with healthcare projects viewed as an important community project to fulfill the NMTC Program’s mission. Nearly all healthcare-related organizations, both for profit and nonprofit, may be eligible participants. Recent successful applicants have included hospitals, health centers, walk-in clinics, women’s health facilities, federally qualified health centers, ambulatory centers, senior living and long-term care facilities, addiction and recovery centers, mobile health units, outpatient/inpatient centers, family health centers, and dental centers.
Through participation in the NMTC Program, healthcare-focused organizations may be eligible for low-cost financing that may help reduce overall project costs and provide access to more affordable capital. The NMTC Program attracts private capital into qualified projects by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called community development entities (CDEs). These CDEs use the equity investments to facilitate low-cost, below-market rate loans to qualified projects.
The NMTC Program is funded annually by the Community Development Financial Institutions Fund, a division of Treasury. There is no formal application period for projects as projects are selected for funding by individual CDEs and NMTC investors throughout the calendar year. However, community benefits, costs, and timing of projects are key factors for project selection. There is no guarantee that qualified projects receive funding, and it may take multiple attempts to secure funding.
In addition, each organization follows its own in-house project review process, but generally, there are several key process steps that a qualified project should consider when beginning the NMTC process. For example:
- CDEs and investors review projects that have requested funding. As part of this process, a CDE will often consider:
- What are the benefits to the community?
- Is there a defined need for funding?
- What is the status of project development?
- What is the status of project funding?
- CDEs and investors select projects for funding.
- The project is not obligated to move forward with funding, even if selected.
- The project and the related NMTC funding move to the loan closing stage.
- At closing, the project is funded via loans made directly to the project.
- Once the project is funded, annual compliance and reporting is required for seven years.
Healthcare organizations wanting to secure funding for a project through the NMTC Program develop an application, identify a CDE that may provide funding, and then go through the above process. Our NMTC team can provide in-depth assistance throughout the process to help navigate the NMTC Program. If you have questions or need assistance, please reach out to a professional at FORVIS or use the Contact Us form below.