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1
If the CDE approves the project, investors provide capital to CDEs in exchange for the tax credits purchased at a discount. This monetization stage is essential for funding the NMTC loans to help subsidize the project.
Step four
The CDE thoroughly evaluates the application, specifically focusing on criteria such as community impact, financial viability, alignment with NMTC program goals, and the project’s likelihood of success.
Step three
Next, the QALICB prepares and submits an application to a CDE. The application typically includes detailed information about the business or project and its location, as well as the project’s specific benefits for the community.
Step two
First, the CDFI Fund allocates NMTC funds to CDEs. Each year, the CDFI Fund conducts a competitive application process to allocate NMTCs to CDEs. CDEs submit detailed applications outlining their plans for investing in low-income communities, and the CDFI Fund evaluates these applications based on criteria such as community impact, financial viability, and alignment with NMTC program goals. Successful CDEs are awarded NMTC allocations, which they can then use to attract private investment for qualifying projects.
Step One