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New Markets Tax Credit (NMTC) Services

Through a proprietary collaborative software-based platform, FORVIS offers New Markets Tax Credit (NMTC) services to generate the NMTC transaction model in real-time, potentially shaving weeks off a closing schedule and reducing overall transaction fees.

More Efficient NMTC Services with FORVIS

NMTC transactions require a transaction model that documents how the NMTC deal impacts each participant. This model is essential but often takes significant time and can lead to delays in the deployment of needed capital. Often these models are based in spreadsheets and require manual entry and review—overall, the process can be inefficient.

FORVIS has developed the NMTC Transaction Forecasting Tool that improves speed, increases accuracy, and drives value through the entire NMTC transaction. Through our proprietary software, we can generate the NMTC transaction model more quickly than traditional Excel-based solutions. The traditional approach typically takes weeks to get an initial draft of the report and creates a lot of back-and-forth. Our approach, however, enables investors to obtain a first draft through a simple, informative information collection process generally in a matter of days, rather than weeks, saving weeks during the modeling process.

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Faster NMTC Transaction Models

Wes Ernst, director, talks about how our innovative approach to NMTC transactions keeps your project at the center of the process, helping reduce risk, as well as potentially save money and time.

How Does the NMTC Program Work?

Originally enacted by Congress under the Community Renewal Tax Relief Act of 2000, the NMTC Program is both a financing tool for qualified projects and a tax incentive for investors. The NMTC Program attracts private capital into low-income communities 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). The credit totals 39% of the original investment amount and is claimed over a period of seven years. Low-income communities often experience a lack of investment, as evidenced by vacant commercial properties, outdated manufacturing facilities, and inadequate access to education and healthcare services. The NMTC Program aims to break this cycle of disinvestment by attracting the private investment necessary to reinvigorate struggling local economies.

Step #1
The Community Development Financial Institutions (CDFI) Fund of the U.S. Department of Treasury allocates NMTC dollars to CDEs.

  • A CDE is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in low-income communities (LIC).

Step #2
CDEs and investors select qualified projects for funding.

  • Both CDEs and investors will provide a project a term sheet that outlines the financing terms and expectations for the NMTC transaction.

Step #3
CDEs, investors, and projects begin the process of documenting a NMTC transaction.

  • FORVIS helps prepare the transaction model, documenting the NMTC financing.
  • Investors underwrite and seek internal approvals
  • Legal counsel prepares loan agreements and other transaction documents

Step #4
The transaction closes on the NMTC financing

  • Investors receive tax credits – The credit totals 39% of the original investment amount and is claimed over a period of seven years
  • CDEs loan funds to the selected projects
  • Projects receive funding

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