New Markets Tax Credit (NMTC)
CDFI Fund / U.S. Department of Treasury
Below-market loans ($2M–$20M)
Below-market financing via 39% tax credit CDEs
Federal program providing a 39% tax credit over 7 years to investors who make Qualified Equity Investments (QEIs) into Community Development Entities (CDEs), which in turn deploy below-market-rate loans and equity into businesses and real estate projects in low-income communities. End-user businesses access NMTC as cheaper-than-market financing from a CDE partner, not as a direct credit. Most recent allocation: October 2024 ($5B across CDEs). Made permanent in 2022.
- Funding type
- Tax Credit
- Level
- Federal
- Amount range
- $2,000,000 – $20,000,000
- Realistic amount
- For end-user businesses: $3M–$10M in below-market financing. The credit subsidizes roughly 20–25 cents per dollar of fin…
- Deadline
- Annual — CDFI Fund announces CDE allocation round typically Q3/Q4. Most recent: October 2024. Businesses access through CDEs on a rolling basis as CDEs deploy their allocation.
- Status
- active
- States
- Nationwide
- Payment model
- tax offset
Who qualifies
- Business or real estate project must be located in a qualified Low-Income Community (LIC) census tract
- Business must be an 'active' operating business — passive holding companies and certain excluded businesses (golf, gambling, liquor stores, etc.) are ineligible
- Project must receive financing from an allocated CDE (not directly from CDFI Fund)
- CDE must have an active NMTC allocation from the CDFI Fund
- The CDE must make a Qualified Low-Income Community Investment (QLICI) — typically a loan or equity investment into the business
- Businesses generating most income from residential rental housing are generally excluded
- No minimum revenue requirement for the receiving business; CDE underwrites creditworthiness
Hard requirements
- Must be incorporated
- Minimum project size: $2,000,000
What it covers
Eligible expenses
- Commercial real estate acquisition, construction, or renovation in LIC
- Manufacturing equipment and machinery
- Working capital for operating businesses in LIC
- Healthcare facilities, community health centers, FQHCs
- Charter schools, childcare centers, educational facilities
- Grocery stores and food access projects in food deserts
- Mixed-use commercial/residential development (commercial portion only)
Ineligible expenses
- Residential rental housing (primary use)
- Golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks
- Gambling establishments (casinos, racinos)
- Liquor stores
- Passive investment holding companies
- Projects located outside qualified LIC census tracts
- Refinancing of existing debt without new project (in most CDE guidelines)
How to apply
-
1
Verify LIC location
Confirm your project address is in a qualified Low-Income Community census tract using the CDFI Fund's mapping tool or FFIEC census tract lookup. This is a binary gate — non-LIC projects cannot access NMTC.
~1 hrs
-
2
Identify allocated CDEs operating in your area
Search the CDFI Fund's NMTC award database for CDEs with active allocations that have deployed in your state and sector. Many CDEs specialize by geography (Southeast, rural, etc.) or sector (healthcare, manufacturing).
~4 hrs
-
3
Prepare project package for CDE
Assemble a traditional loan package (business plan, 3 years financials, project description, use of funds, community impact narrative). CDEs also require a 'community impact' section — jobs created/retained, services to LIC residents.
~20 hrs
-
4
CDE underwrites and structures the deal
If the CDE approves, they structure a NMTC transaction: typically a leverage lender provides senior debt, tax credit investor provides equity, and the CDE issues a QLICI loan at a low interest rate to the borrower. CDE handles tax credit investor syndication.
~40 hrs
-
5
Close and compliance period
Transaction closes with legal counsel. The NMTC compliance period is 7 years — the borrower must maintain the project in the LIC and operate an active trade or business throughout. Unwinding early triggers credit recapture.
~20 hrs
NMTC deals have a $50K–$100K closing cost floor (legal, accounting, structuring fees) — viable only for projects $2M+. Smaller businesses are priced out regardless of eligibility.
Deadline & timing
CDEs apply competitively to the CDFI Fund for allocation (annual cycle). End-user businesses do NOT apply to the CDFI Fund directly — they approach allocated CDEs, which have their own intake processes. Contact a CDE operating in your geography to understand their current pipeline.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.