New Markets Tax Credit (NMTC) Program

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:

• 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

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)

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