Funding the Future with NMTC
As a Community Development Financial Institution (CDFI) devoted to financial and lending equity, Sunrise Banks has been participating in the federal New Markets Tax Credit (NMTC) program since 2009. While membership is now held by approximately 100 banks in the U.S., Sunrise Banks was the first CDFI bank in Minnesota.
Projects using NMTCs often involve the acquisition, rehabilitation or construction of real estate or the expansion of operating businesses sparking economic growth in low-income communities. Projects using this program have sparked economic growth throughout the Twin Cities since the program’s inception in 2001.
The NMTC program drives capital to economically distressed communities and in turn stimulates economic growth and revitalization for those same communities. It helps attract investment capital and provides small businesses, nonprofits and developers access to better financing rates and terms than typically available in traditional lending programs.
Benefits of New Markets Tax Credits Program Financing
- Access to Capital
NMTCs provide access to additional capital at favorable terms, often with below-market interest rates and flexible repayment terms.
- Reduced Cost of Capital
NMTC financing offers investors a federal tax credit equal to 39% of the investment amount over seven years, effectively reducing the cost of capital.
- Interest-Only Payments
NMTC financing can be structured to fill gaps in project financing, allowing projects to proceed that might otherwise be financially unfeasible
- Community Development Focus
NMTCs are targeted at investments in low-income communities, aligning with social impact goals and potentially attracting additional stakeholder support and goodwill.
- Flexible Use of Funds
This financing can be used for a wide range of projects, including real estate development, small business loans, and community facilities, providing flexibility to meet diverse community needs.
- Stimulating Investment in Challenging Markets
NMTCs incentivize private investment in areas that may have been historically underserved or overlooked by traditional lenders and other investors, stimulating long-term economic growth in disadvantaged communities.
How do NMTC help you?
The CDFI Fund, a branch of the US Treasury Department, awards NMTC allocation authority to Community Development Entities (CDEs) based on applications displaying the CDE’s demonstrated need in the community they serve and a history of community involvement. This allocation in turn helps finance projects across the US need additional low-cost capital. Here are a few examples of our CDFI NMTC lending in action:
- Seward Co-op is the oldest of its kind in the Twin Cities. Under the cooperative model, its members – those who shop at the store – own the business and have a say in how it operates. Seward completed work on its Friendship Store in 2015, in large part with funding from the New Markets Tax Credits program.
- NMTCs helped make a big difference in the revitalization of the Midway and University Ave. in St. Paul, Minnesota. Allocation for quintessential local organizations like the Midway YMCA, Junior Achievement, and Habitat for Humanity has led to more living-wage jobs, needed community services, and economic growth for the entire neighborhood.
- The brick building at 807 Broadway St NE in Northeast Minneapolis — the Highlight Center— has been a fixture in the Logan Park Neighborhood for more than a century. Its 2014-15 renovation was made possible by grants from the Metropolitan Council and the Metropolitan Livable Communities Fund (TBRA) alongside $8 million in New Markets Tax Credits.
Who is eligible for a New Markets Tax Credit project?
The New Markets Tax Credit (NMTC) program encourages private investment in low-to-moderate-income communities. In order to be eligible, a project must be located in a community officially designated as eligible, be able to show contribution to local economic revitalization and remain compliant with the regulations and requirements set forth by the CDFI fund for the NMTC program.
Successful projects using the program in the past have included:
- Commercial Development
- Factories and Industrial Facilities
- Education Facilities
- Mixed-use Projects
- Healthcare or Health-related Facilities
- Retail Projects
- Community or Cultural Centers
Ready to get started?
To learn more or to apply for NMTC financing, contact us. Applicants should email or call:
Mary Stoick, Senior Vice President, Director of Tax Credit Lending
(651) 927-1611
Mary.Stoick@SunriseBanks.com
Or fill out the form below: