We are interested in participating as a Borrower in New Markets Tax Credit Financing . . .

Generally, with respect to the Forgiven NMTC Loan:

  • it only requires approximate 1.0% to 1.2% interest-only payments during
    the 7-year NMTC compliance period; and
  • it is forgiven at the end of the 7-year NMTC compliance period.

Generally, with respect to the Non-Forgiven NMTC Loan:

  • it only requires below-market interest-only payments during the 7-year NMTC compliance period (although such interest rate is not as low as that of the Forgiven NMTC Loan, it is still generally significantly below market); and
  • after the 7-year NMTC compliance period, the loan amortizes through its maturity date of up to 40 years (which can be beyond any secured asset’s useful life).

Generally, the economic benefits of the NMTC Program subsidy (whether in the form of the Forgiven NMTC Loan or the Non-Forgiven NMTC loan) include:

  • gap financing;
  • in the case of the Forgiven NMTC Loan, approximate 1.0% to 1.2% interest-only payments during the 7-year NMTC compliance period and forgiveness after such period;
  • in the case of the Non-Forgiven NMTC Loan, below-market interest-only payments during the 7-year NMTC compliance period (which rate may continue through the maturity date which can be up to 40 years and beyond any secured asset’s useful life);
  • subordination to existing and subsequent debt;
  • various non-traditional and favorable terms;
  • subject to flexible financial underwriting criteria (permitting higher than standard loan to values (or not even requiring an appraisal); permitting lower than standard debt service coverage ratios; accepting lower credit scores; accepting limited business history; and accepting non-traditional forms of collateral (such as inventory);
  • ability to “leverage” other sources of financing for a multiplier economic benefit using the IRS Approved Leverage Structure;
  • “softer” foreclosure and enforcement rights (because the NMTC Investor does not require a return of its purchase price for the NMTCs and the Allocatee is not using its own funds in the NMTC financing);
  • If applicable, state NMTCs provide additional subsidy;
  • ability to obtain additional financing (based on the favorable and nontraditional terms discussed above); and
  • substantial community and economic impacts to residents in “Low-Income Communities” and “Targeted Populations.”

We identify, profile and solicit Allocatees and NMTC Investors that provide optimal nontraditional and favorable terms and flexible underwriting requirements based on current and projected demand for certain types of borrowers (whether for-profit or nonprofit), uses of NMTC financing (such as real estate, equipment or operations), types of communities that will benefit from the NMTC financing (such as urban or rural or characterized by certain distress criteria (such as higher unemployment rates or poverty rates), and location in the country (based on NMTC Investors’ and Allocatees’ service area or targeted so-called “underserved states”).