By Mandi Wright, Sutherland Capital
As a business owner or manager in rural Missouri, you may face unique challenges when it comes to expansion, including limited access to capital and a smaller customer base. Fortunately, federal programs exist to support businesses like yours, and one of the most impactful tools available is the New Market Tax Credit (NMTC) program.
The NMTC program, developed by the U.S. Department of the Treasury, is a community development initiative that promotes private investment in low-income and under served communities. For rural businesses in Missouri, leveraging this program can unlock crucial financing opportunities to support expansion efforts. Below, we explain how the program works and how it can benefit your business.
What is the New Market Tax Credit (NMTC)?
Established in 2000, the NMTC program stimulates economic growth in distressed communities across the United States. Each year, the federal government allocates a set amount of tax credits to Community Development Entities (CDEs)—specialized organizations that raise capital from investors in exchange for tax credits. This capital is then used to fund projects in qualified low-income areas, including many rural regions in Missouri.
The NMTC program’s key advantage is its ability to provide business owners with access to low-interest loans, equity investments, and other financing options. By incentivizing private investment, the program helps economically disadvantaged areas attract the resources they need for revitalization and growth.
How the NMTC program can benefit your rural Missouri business
The NMTC program offers several benefits to rural business owners seeking to expand their operations. Here are some of the ways it can help your business:
Access to affordable financing
The NMTC program enables access to loans and investments with below-market rates and extended repayment terms. This makes it easier to fund significant projects, such as building manufacturing facilities, retail spaces, or distribution centers. With lower interest rates, you can manage operational costs effectively and reinvest savings into your business’s growth.
Attracting investors
Investors are drawn to the program’s tax incentives, which provide a 39% federal tax credit over seven years. This makes your business an appealing opportunity for both local and national investors, helping you secure the capital needed for expansion.
Job creation and community development
Expanding your business with NMTC funding often leads to job creation in your community. The program focuses on projects that improve the local economy and infrastructure, fostering long-term growth and stability in your region.
Support for diverse expansion projects
The NMTC program supports a variety of expansion efforts, from constructing new facilities and purchasing advanced equipment to upgrading infrastructure and creating renewable energy systems. Businesses in agriculture, healthcare, technology, and other sectors can leverage NMTC funding to diversify and strengthen the local economy.
How to leverage the NMTC program for your business
To take advantage of the NMTC program, your business and project must meet certain eligibility requirements. Here’s how to navigate the process:
Determine eligibility
Your project must be located in a rural or low-income area. Many parts of rural Missouri qualify, especially areas with poverty rates exceeding 20% or median family incomes below 80% of the area median.
Partner with a Community Development Entity (CDE)
CDEs administer NMTC funding and will assess your project’s suitability. Partnering with a CDE experienced in rural Missouri projects increases your chances of success.
Develop a solid business plan
A strong business plan is essential. Outline your expansion goals, the expected economic impact, and your use of NMTC funds. Emphasize how your project will benefit both your business and the surrounding community to make your proposal more attractive to investors.
Collaborate with local economic development organizations
Local chambers of commerce, economic development agencies, and nonprofits can guide you through the NMTC process and connect you with the right CDEs.
Success stories in rural Missouri
Businesses across Missouri have already harnessed the power of the NMTC program to fuel expansion and strengthen local economies.
For instance, a southern Missouri agricultural business used NMTC funding to purchase state-of-the-art processing equipment, boosting production and creating jobs. Another success story involves a rural health clinic that expanded its services, improving healthcare access for residents in under served areas.
These examples highlight the NMTC program’s potential to drive business growth while fostering community development.
Conclusion
The New Market Tax Credit program offers an unparalleled opportunity for business owners in rural Missouri to fund expansion projects and contribute to their communities’ economic vitality. By providing affordable capital and incentivizing private investment, the NMTC program can help unlock growth, create jobs, and strengthen local economies.
If you’re planning to expand your business in rural Missouri, consider exploring the NMTC program. With proper planning and guidance, this program could be the key to achieving your growth ambitions. For more information, please contact Mandi Wright, Sutherland Capital by email at mwright@sutherland-capital.com, or call 314-440-3601(cell).