To see if New Markets Tax Credit (NMTC) program may work for financing your business, please review the questions below.
What is a typical NMTC funding project size?
A typical NMTC funding request is between $3 and $50 million, though the total project size may be larger. An NMTC financing request of more than $20 million typically requires the participation of multiple NMTC awardees.
What kind of business can be funded with NMTCs?
NMTCs are very flexible and can be used for almost any kind of business, including manufacturing, downtown real estate development, community centers, health care, office space, downtown housing over commercial space, and farm, food and forest processing. The following are exceptions:
- Private or commercial golf courses
- Country clubs
- Massage parlors
- Hot Tub facilities
- Suntan facilities
- Racetrack or other facility used for gambling
- A store whose principle business is the sale of alcoholic beverages for consumption off-premises
- Any trade or business consisting predominantly of the development or holding of intangibles for sale or license
Additionally, less than 80% of gross income must come from rental of dwelling units, and a portion of any residential rental units may be required to be reserved for low-income residents.
Are there any limitations on where my business can be located?
To receive NMTC-funding, a business must be located in a federally-defined low-income census tract.
What type of funding is available through the NMTC program?
The majority of NMTC financing is delivered as debt, though equity or equity-equivalent financing may be available in special circumstances.
What is the benefit of NMTC-financing to my business?
Most NMTC-funded businesses receive financing that involves more favorable terms and conditions than those the market typically offers and may include some of the following:
- Below market interest rates
- A longer than standard period of interest only loan payments
- Higher than standard loan to value ratio
- A longer than standard amortization period
- More flexible borrower credit standards
- Nontraditional forms of collateral
- Lower than standard debt service coverage ratio
NMTC equity can provide 20-25% of equity like gap financing.
Why should I work with Vermont Rural Ventures (VRV)?
As Vermont’s largest awardee with over 5 years of experience, VRV is recognized as an industry leader in the NMTC field. Our skilled Investment Team has the expertise to guide you to closing, and our professional Asset Management and Compliance teams will see you through the life of your NMTC financing.
Does VRV have any special requirements I should know about?
VRV will only fund projects that support our mission and adhere to VRV’s Triple-E or Triple-Bottom-Line underwriting criteria. VRV targets a majority of NMTC investments to rural communities. VRV finances projects that create or retain jobs and essential service for Vermonters.