Key Benefits of the NMTC Loan Program

It is a loan-to-VALUE financing program.
The term of the NMTC portion being financed more closely matches the life of the asset being financed.
A lower "down payment" (10% or 15%) versus the 25% to 30% typically required for conventional financing, preserves business cash for more urgently needed working capital requirements.
Because the NMTC portion is a second mortgage and subordinate to a regular bank loan, risks are minimized to the financial institution, allowing a bank to more competitively position its own market terms and rates on NMTC projects.

NMTC Loan Structuring

The structure and relative financing shares associated with the NMTC Loan Program approximate those of the SBA 504 Loan Program, with the one key difference being that NMTC loans are LOAN-TO-VALUE loans. The appraised value of the real estate or equipment involved in the project defines how much can be borrowed / financed using the NMTC Loan Program.

There are two available structures under the program, depending on whether or not the NMTC share will be greater or less than $500,000.

If the NMTC portion of the financing project is $500,000 or less, the total financing package (partner bank lender’s first mortgage loan + NMTC second mortgage loan) can be at 90% loan to value.
If the NMTC portion of the financing project is more than $500,000, the total financing package (partner bank lender’s first mortgage loan + NMTC second mortgage loan) can be no higher than 85% loan to value.