New Markets Tax Credits Deep Dive - Accion Opportunity Fund
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New Markets Tax Credits Deep Dive

You already know about AOF’s small business lending program, which has been making small-dollar loans to small and micro-businesses since 1995. Today, we want to do a deep dive into a different program we operate: the New Markets Tax Credits (NMTC) program.


AOF typically closes 2-4 NMTC transactions per year—but don’t let that seemingly small number deceive you. NMTC transactions are for BIG projects with BIG impact.

What is NMTC?

The NMTC program was established by Congress in 2000 as a bipartisan initiative to encourage investment in distressed, low-income communities. Through this program, investors provide capital to community development entities (CDEs), and in exchange are awarded credits against their federal tax obligations. Without these tax incentives, investment in economically distressed communities is a hard sell due to perceived risk and low returns.

NMTC was created to incentivize investment in projects that might otherwise never get off the ground. Projects financed through NMTC lift underserved low-income communities by creating jobs, spurring new economic activity, and creating anchor developments that encourage additional investment in the community.

How does it work?

The CDFI Fund allocates tax credit authority to Community Development Entities (CDE)s—financial intermediaries that bring investors together to finance a project. In exchange for investing in CDEs, investors claim a tax credit worth 39% of their original investment, which is claimed over a seven-year period.

AOF is one of these CDE intermediaries. We specialize in projects that provide critically needed services to large numbers of low-income individuals and families. We fund projects such as housing for those experiencing homelessness, health clinics, and youth services (see below for more information on our projects). Our NMTC financing offers our nonprofit borrowers flexible terms and the option to convert a portion of their loan into equity at the end of a 7-year compliance period.

How does NMTC fit into AOF’s work?

AOF has been an NMTC allocatee since the program’s inception. NMTC is deeply aligned with our core purpose to build economic mobility in low-income and BIPOC communities. While many types of projects may be NMTC-eligible, AOF will only finance projects that a) have a clear and compelling benefit to low-income communities and individuals; and b) pass the “but-for” test—meaning, the project could not be completed without the flexible terms and investor incentives that NMTC provides.

Aside from the clear mission alignment, NMTC also provides earned revenue that supports AOF’s other work. We earn fees when closing a project’s financing and for monitoring the project’s compliance with NMTC requirements, for seven years following the transaction. These fees directly support AOF’s ability to offer business advising services and competitive rates on our small business loans.

Our projects, which span several western US states, are all located in low-income census tracts and provide a variety of community services. These include free/affordable health and dental care facilities, homeless services and permanent supportive housing projects, education, healthy food retail, and at-risk youth services for low-income and BIPOC communities. One of the most unique projects we’ve financed was a Native Forest and river reclamation project!


To date, AOF has invested $487.5 million in NMTC projects. Cumulative impacts of these projects include:

  • Building 40 nonprofit facilities and other community projects
  • Creating, retaining, or supporting 9,544 construction and permanent jobs
  • Community facilities serve more than 894,853 unique individuals annually, including
  • 482,951 low-income individuals
  • 364,384 people of color
  • 177,506 at-risk youth

For More Information:

CDFI Fund NMTC fact sheet

AOF website

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