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New Markets Tax Credit (NMTC) Program

DAKOTA BUSINESS LENDING

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Funding Amount

Variable (rolling allocations)

Deadline

Rolling / Open

Grant Type

foundation

Overview

New Markets Tax Credit (NMTC) Program

Overview: A federal financing program administered by the U.S. Department of Treasury's Community Development Financial Institution (CDFI) Fund. Dakota Business Lending is a Community Development Entity (CDE) that has received multiple NMTC allocations to provide transformative financing for small businesses in low-income and distressed areas.

Current Allocations:

  • Third award: $50 million (2023/2024)

  • Second award: $30 million (2022)

  • First award: $30 million (2021)

  • Total to date: $110 million allocated

    • Geographic Scope:

  • Primary: North Dakota (Fargo, Bismarck, Devils Lake, Grand Forks, Sioux County)

  • Expansion planned: Montana and Minnesota

  • Projects must be located in NMTC-eligible low-income or distressed census tracts

    • Focus Areas:

  • Small business expansion and growth

  • Job creation and retention (quality, accessible jobs)

  • Transformative projects in low-income/distressed areas

  • Increased access to goods and services for low-income populations

  • Manufacturing, office, and retail space development

    • Funding Mechanism:

  • Provides gap financing with interest-only payments for 7 years

  • Converts to equity after 7 years (principal payment not required)

  • Combines NMTC investor funding with leverage lender loans

  • Dramatically reduces capital requirements for borrowers

    • Project Requirements:

  • Located in qualified low-income or distressed census tract

  • Large-scale and transformative (generally greater than $7 million)

  • Provides quality and accessible jobs or services to low-income populations

  • Must pass "but-for" test (project would not be feasible without NMTC)

  • Clear community benefits and economic impact

    • Highly Distressed Priority Areas (as of 2020 census):

  • Devils Lake - Census Tract 38005940100

  • Grand Forks - Census Tracts 38035010301, 38035010302

  • Fargo - Census Tracts 38017005020, 38017010111

  • Sioux County - Census Tract 38085940900

    • Economic Impact (DBL to date):

  • $60 million allocated to 7 qualifying businesses

  • $148.2+ million direct project impact

  • 556 permanent jobs created/retained

  • $350,000+ donated to 14 local nonprofits through "pay-it-forward" concept

    • Program Features:

  • Highly competitive selection process

  • Requires strong partnerships with leverage lenders, investors, and stakeholders

  • Pay-it-forward concept: Supported businesses encouraged to donate to local nonprofits

  • Detailed tracking of community benefits through Community Benefits Agreements

  • Uses third-party econometric modeling to measure impact

    • Who Can Participate:

  • Small business owners with projects in eligible areas

  • Community and regional banks (as leverage lenders or tax credit investors)

  • Other lending institutions

  • Larger corporate banks as tax credit investors

    • Key Contacts:

  • Organization: Dakota Business Lending

  • Phone: 701-293-8892

  • TTY: 711

  • Email: [email protected]

  • Locations:

    • - Fargo, ND: 5630 36th Ave S, Fargo, ND 58104
    - Bozeman, MT: 544 E Main St, Bozeman, MT 59715
    - Worthington, MN: 1125 Lexington Ave, Worthington, MN 56187
    - Sioux Falls, SD: 3240 E Bison Trail, Sioux Falls, SD 57108

    Program Background:

  • Created in 2000 through Community Renewal Tax Relief Act

  • National scope: $5 billion allocated annually to ~100-107 CDEs

  • National impact: 1,354+ allocation awards, $66 billion+ in tax credit authority, $55.9+ billion invested in low-income communities, 231+ million square feet of space supported

  • DBL is first and only North Dakota-based CDE selected for NMTC

  • DBL ranks in top 100 community-focused organizations nationally

    • How to Apply

    Application Process for NMTC Funding

    #### Step 1: Early Outreach

  • Contact DBL as early as possible, even if project is in preliminary stages

  • Discuss project potential with loan officers

  • Get project added to DBL's pipeline for consideration

    • #### Step 2: Complete Intake Form

  • Complete NMTC Project Intake Form (available on DBL's NMTC webpage)

  • Provide detailed and comprehensive information about project

  • Include all essential elements outlined below

    • #### Step 3: Project Selection and Board Review

  • DBL's NMTC Governing and Advisory Boards evaluate project

  • Determination of NMTC eligibility and priority ranking

  • Highly competitive process based on:

    • - Community impact requirements
    - Demand and priority
    - Eligibility criteria compliance
    - Availability of allocation funds

    #### Step 4: Financial Structuring

  • If selected, DBL works with borrower, leverage lender bank, and other parties

  • Create customized financial stack combining NMTC with other financing

  • Coordinate with all entities involved

    • #### Step 5: Investor Participation and Funding

  • DBL monetizes NMTC allocation by selling tax credits to investors

  • Investors receive ~16-17% return on investment basis

  • Cash returned to DBL to fund gap financing

  • Funds flow to borrower through two separate loans (leverage lender + NMTC investor)

    • Required Application Materials

    #### Basic Application Checklist

    General Business Information:

  • Business name

  • Business location (must be in eligible census tract)

  • Business type/industry

  • Contact information

    • Project Description:

  • Industry/sector

  • Project type and scope

  • Project costs and budget

  • Timeline and schedule

  • Location details

  • Total square footage

  • Overall project summary

    • Community Benefits Section:

  • Impact and importance to community

  • Jobs created and/or retained (with wage and benefit details)

  • Community redevelopment plans

  • Economic impact assessment

  • Additional community investments

  • Increased goods or services available to low-income populations

    • Required Attachments:

  • Project Narrative (detailed description)

  • Borrower Pro-Forma (financial projections)

  • Financing structure and projections

  • Appraisals

  • Project details, renderings, and budget breakdown

  • Proposed construction schedule

  • Financial statements

  • Community and economic impact details

  • Support letters (from partners, community leaders, etc.)

  • Term sheets and commercial bank commitments

  • Community Benefits Agreement framework

    • Impact Requirements (Must Meet ALL)

    1. Location in Low-Income or Distressed Census Tract

  • Project must be located in NMTC-eligible area

  • Reference NMTC Eligibility Map: https://bit.ly/NMTC-ND-2020

    • 2. Creation of Quality and Accessible Jobs

  • Quality jobs: Good wages and benefits

  • Accessible jobs: Available to low-income and limited-education populations or individuals

  • Must specify number of jobs and job descriptions

    • 3. Increase of Community Goods and/or Services

  • Project should increase availability of goods and/or services

  • Focus on serving low-income areas or populations

    • Key Application Tips

    • Be detailed and thorough even if project is in early stages
    • Reach out early - pipeline is continuously revised based on priority and availability
    • Provide comprehensive information to help DBL evaluate eligibility and priority
    • Demonstrate clear community benefit and economic impact
    • Have bank partnerships lined up - leverage lender commitment strengthens application
    • Use third-party support letters - testimonials from community leaders and partners are valuable
    • Plan for large-scale transformation - projects should be >$7 million for DBL consideration

    Contact for Applications

    • Phone: 701-293-8892
    • Email: [email protected]
    • Web: dakotabusinesslending.com/nmtc
    • Loan Officers: Available at all DBL locations

    Download: NMTC Project Intake Form available at dakotabusinesslending.com/nmtc

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    Focus Areas & Funding Uses

    Fields of Work

    small-businessescommunity-developmenteconomic-services

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