GAO Report Examines Options For Improving NMTC Program

摘要

Changes in the New Markets tax credit (NMTC) program, including conversion to a grant program, could boost the amounts invested in low-income community businesses, according to a U.S. Government Accountability Office (GAO) report.rnTo boost the effective yield of the tax credit, investors typically use a leveraged investment structure, combining their equity with borrowed funds in a limited liability entity, which in turn invests in a community development entity (CDE). Since the amount of the tax credit is a fixed percentage of the total investment in the CDE, a smaller equity investment and larger loan will produce a higher yield.