September 22, 2018

Edge Business Solutions

New Markets Tax Credits

What is New Markets Tax Credits?

The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.

How does this benefit an organization’s construction project?

The investment that a taxpayer makes in the project can be used for an organization’s construction project. This typically becomes an equity investment in the project after the seven-year compliance period.

How will Edge Business Solutions Business Solutions help your organization receive equity in your capital project?

Edge Business Solutions will work with your organization to receive an investment from these taxpayers through the NMTC program as part of your construction financing for a project. Edge Business Solutions will become part of your internal project team to develop the following:

  • Project Cash Flow Model
  • Project Information Document
  • Business Plan
  • Zero Based Budget
  • Revenue and Expense Reconciliation
  • Source NMTC Allocation
  • Assist in the structuring of the NMTC transaction
  • Assist in the closing of the NMTC transaction
  • Preparation and support throughout the Conventional Bank Financing process (Bridge Loans, Long Term Debt, etc.)
  • State funding programs (ex: Redevelopment Assistance Capital Program – RACP)
  • State Tax Credits (ex: Neighborhood Partnership Program – NPP)
  • Project Tracking
  • Draw requests for NMTCs
  • Compliance Reporting