The New Markets Tax Credit (NMTC) program is a powerful vehicle for Wells Fargo to help meet the needs of these communities. The NMTC program is a federal tax incentive authorized by Congress in 2000 to help spur the investment of capital in small businesses and commercial real estate located in communities of need. Through NMTC allocations, Wells Fargo reduces borrowing costs for non-profits and entrepreneurs, enabling higher risk loans and investments that shoulder collateral shortfalls and credit risks.
There are three primary types of businesses eligible for the New Markets Tax Credit Program:
- Community facilities (such as charter schools, child care centers, healthcare clinics, and community and performing arts centers)
- High-impact real estate development (such as redevelopment projects, mixed-use and transit-oriented developments, and neighborhood-serving retail developments)
- Job creation and small business finance (such as owner-occupied facilities finance and expansion capital projects)
Targeted communities are in highly distressed areas and generally have at least one or more of the following characteristics:
- Poverty rates greater than 30%
- Unemployment rates at least 1.5 times the national average
- Median income less than 60% of area median income
- Located in empowerment zones, enterprise and renewal communities, HUB zones and Brownfield sites
- Located in a redevelopment project area
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