Federal New Markets Tax Credit Program

The New Markets Tax Credits (NMTCs) was enacted by Congress in 2000 as part of the Community Renewal Tax Relief Act. The goal of the program is to spur revitalization efforts in economically distressed communities across the United States. The New Markets Tax Credits are allocated to certified Community Development Entities (CDEs) like Heartland Renaissance Fund (HRF), which then monetize the tax credits to provide debt or equity capital for a variety of operating business and commercial real estate projects.
NMTC investors receive a 39% tax credit against federal income tax liability for qualifying investments into CDEs over a 7 year period. The NMTCs program is administered by the CDFI Fund of the U.S. Department of Treasury.
Heartland Renaissance Fund has received $200 million dollars in NMTC allocation since 2004 and is actively working to deploy the credits to create jobs and provide catalytic economic impacts throughout Arkansas in underserved communities.

Products and Services

Heartland Renaissance Fund (HRF) provides debt or equity investment capital to a variety of businesses and projects. Heartland Renaissance Fund’s flexible financing products are compatible with many commercial projects including commercial real estate, new business ventures, and business expansions or equipment purchasing. Heartland Renaissance Fund provides financing to projects with demonstrable community impacts and structures each of its investments to provide the maximum benefit to the project.

Heartland Renaissance Fund’s investments are structures to provide many of the following characteristics:

  • Debt with equity features
  • Debt with nontraditional forms of collateral
  • More flexible borrower underwriting criteria
  • Below market interest rates
  • Equity investments
  • Low origination fees
  • Longer than standard amortization periods

Heartland Renaissance Fund’s team members have more than 45 years of experience providing services working with business and structuring investment capital for innovative, early-stage and high-growth companies in a wide variety of industries. Combined team member transaction experience exceeds 1.1 billion dollars. Heartland Renaissance Fund will leverage its relationships with other financial and lending institutions and economic development entities to create successful ventures for the stakeholders.

Advisory services currently offered include:

  • Tax credit finance and syndication
  • Private placements
  • Public/private partnership opportunities
  • Debt and alternative financing solutions

Qualifying for Federal New Markets Tax Credits

To be eligible for NMTC financing, the business must be located in a Low Income Community as defined by the CDFI Fund. A Low Income Community is defined as a Census Tract with a poverty rate of at least 20%, or a median family income of less than 80% area median, or a non-metropolitan census tract having certain indicia of distress using 2010 Census data. The CDFI Fund is currently updating its eligibility mapping program to incorporate the decennial census for NMTCs. Under the transition rules issued by CDFI, we are utilizing the 2006–2010 America Community Survey to qualify projects for NMTCs until the census tract mapping is fully incorporated by CDFI.

NMTC Census Transition Data FAQ 

NMTC 2006–2010 American Community Survey Eligibility Data

List of Qualifying NMTC Census tracts Within High Migration Rural Counties

Completed Federal New Markets Tax Credit Projects

State New Markets Tax Credits

Arkansas lawmakers passed HB1832, the Arkansas New Markets Tax Jobs Act, which was created to help companies that meet certain criteria receive financing at below-market rates. The Act encourages private sector investment in small businesses, particularly in low-income regions, by providing tax credits tied to private capital investments.

Arkansas Capital Corporation has applied to participate and is expecting to receive a sizable Quesportion of the $166 million state allocation. Arkansas Capital is now actively seeking projects eligible for investment.

Arkansas Capital partners with an organization’s local community bank and works with developers to identify and access alternative project financing options such as the New Markets Tax Credits in a joint effort to create successful ventures for Arkansas.

Companies that are planning to expand and create or retain jobs or companies that are facing financial challenges, are encouraged to contact Arkansas Capital Corporation to see if these New Market Tax allocations can be beneficial to their organization.

Highlights

The Arkansas New Markets Tax Credit Allocation:

  • Allows the Arkansas Economic Development Commission authority to review applications and award state new market tax credits allocation of $166 million starting July 2013
  • Any allocation received can be used by the applicant to support formation of a pool of capital for eligible businesses located in qualified census tracts.

Companies must have a job creation or retention aspect and show a positive economic impact to the state’s economy through an econometric model.