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New Markets Tax Credit Services

The New Markets Tax Credit (NMTC) Program can be difficult to maneuver on your own. The dedicated NMTC team at FORVIS has the in-depth knowledge needed to assist organizations as they navigate through the program.

What is the NMTC Program?

The Federal NMTC Program is a financing tool for qualified projects and a tax incentive for investors. The NMTC Program, financed by the Community Development Financial Institutions (CDFI) fund, 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 (CDE).

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 Low-income communities often experience a lack of investment, as evidenced by vacant commercial properties, outdated manufacturing facilities, and inadequate access to education and healthcare services.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 Fund of the U.S. Department of the Treasury awards tax credit allocation authority to CDEs.

A CDE is a domestic corporation or partnership serving as an intermediary vehicle for the provision of loans, investments, or financial counseling in Low-Income Communities (LICs).

Step 2

CDEs and NMTC investors select qualified projects for funding.

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

Step 3

CDEs, NMTC investors, and projects begin the process of documenting the NMTC transaction.

  1. FORVIS helps prepare the NMTC transaction model, documenting the NMTC financing through our proprietary NMTC Forecasting Tool.
  2. NMTC investors underwrite and seek internal approvals.
  3. Legal counsel prepares loan agreements and other transaction documents.
  4. FORVIS can help CDEs, NMTC investors, and projects close NMTC transactions via our consultant and modeling services.

Step 4

The transaction closes on the NMTC financing.

  1. NMTC investors receive tax credits.
    • The credit totals 39% of the original investment amount and is claimed over a period of seven years.
  2. CDEs loan funds to the selected projects.
  3. Projects receive funding.

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 created TaxCred PRO for New Markets Tax Credit to help improve speed, increase accuracy, and drive value through the NMTC transaction process. Our innovative platform generates the NMTC transaction model quicker than traditional methods. 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 an expedited first draft through a simple, streamlined information collection process. Using TaxCred PRO, the NMTC Service Team can rapidly update the model, saving time for all transaction stakeholders.

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Michael Roney Senior Managing Consultant