New Markets Tax Credit

Business owners serving economically distressed or underserved communities can take advantage of this program which offers below-market interest rates to grow their operations and create jobs.

Fifth Third is an experienced NMTC participant as an equity investor and leverage lender in this locally managed federal program. Fifth Third works with a network of Community Development Entities (CDEs), intermediaries serving low-income communities, to provide funding for qualified projects. Businesses can rely on Fifth Third’s extensive expertise with NMTCs to provide guidance and support in obtaining the financing they need. Here’s how it works:

  1. CDE’s apply for NMTC. NMTC are awarded to a CDE (not directly to a business/borrower)
  2. Qualifying projects receive an allocation of federal income tax credits, which are then sold to private investors, like MB, to generate up-front capital for the project
  3. CDEs, working in conjunction with participating lenders like MB, use the capital to make a below-market interest rate loan to the project
  4. Investors receive a return on their investment through a 7-year stream of income tax credit benefits. In exchange for this return, after the 7 years, the loan is forgiven, which results in true equity in the project
  5. As a result of this funding structure, businesses benefit with below-market terms, including reduced interest rates, and/or enhanced loan-to-value ratios

In some cases, businesses can combine New Markets Tax Credits with an SBA 504 loan or other financing options to increase available funds while they conserve capital. 


  • Must be a business located within an eligible area as defined by U.S. census boundaries. Eligible business types include manufacturers, distributors, service companies, and non-profits.
  • Must generate job growth, economic activity, and/or services in distressed area.
  • Projects with total costs of less than $5 million are generally not cost-effective.


  • A minimal amount of required up-front equity
  • Typically, equity is realized at the end of seven years when loan is forgiven
  • Potential access to approximately 15–20% of additional capital, depending on the amount of remaining federal and state allocations available
  • Consult your tax authority and/or the Internal Revenue Service regarding Investor level benefits of the New Markets Tax Credit (NMTC).

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