Maximizing NMTC: Financial Strategies for Health Care Providers

The federal New Markets Tax Credit (NMTC) Program, established 25 years ago, offers a significant financing opportunity for health care providers looking to develop or renovate facilities. This program provides a 20% subsidy on construction, renovation, equipment acquisition, and operating costs, subtracting transaction fees like legal and accounting costs. Granted as a conditional loan forgivable after seven years of regulatory compliance, the subsidy significantly reduces overall project financing expenses.

The NMTC subsidy can be integrated with traditional financing solutions like debt or bonds, grants, and other subsidies. Additionally, costs incurred up to 24 months before the application can be utilized as part of the funding strategy, offering health care providers an advantage in optimizing their investment in past projects. To qualify, health care projects must meet specific eligibility criteria, such as being in high-poverty or low-income census tracts or serving "Target Populations," which include low-income individuals, even if not located in qualifying areas, subject to additional compliance requirements.

Community Development Entities (CDEs) prioritize projects that align closely with their mission and community impact goals, particularly in Medically Underserved Areas, Health Professional Shortage Areas, or designated rural or distressed regions. Projects that enhance access to care for low-income or uninsured patients, and those offering community benefits like local employment or workforce development, receive further preference. With optimal conditions for health care projects expected in 2026, stakeholders should begin preparations early to secure NMTC allocations. Engaging with advisors, like Foley & Lardner, can assist providers in assessing project eligibility and competitiveness within the NMTC framework.