About New Market Tax Credits (NMTC)

SCORE has been certified as a Community Development Entity by the CDFI Fund division of the U.S. Treasury, allowing SCORE to use NMTCs to provide subsidized financing for qualifying businesses or real estate projects.

SCORE obtains funds to invest in Qualified Active Low-Income Community Businesses (QALICB) through private investors. The NMTC program provides these investors with federal income tax credits based on equity investments made in SCORE’s subsidiaries. This investment is known as a Qualified Equity Investment (QEI). SCORE then uses the QEI capital to provide below-market rate equity or debt capital to qualifying businesses or real estate projects. The capital that a CDE provides to a qualifying project is known as a Qualified Low-Income Community Investment (QLICI).

NMTC Structure

NMTC org chart

The NMTC structure differs from that of many other federal tax credits because the NMTC investor indirectly finances a project through the CDE. Typically, with programs such as the Low-Income Housing Tax Credit or the Historic Tax Credit, the investor receives a tax benefit for investing directly in a project. In NMTCs, the tax credit investor invests money with SCORE, not the project. SCORE in turn provides below-market financing to the project, most commonly in the form of debt.