The New Markets Tax Credit is a public private partnership program between private investors, banks, the Federal Government and private businesses/non-profit organizations. The program’s purpose is to create investment capital to ignite job creation in low income communities.
The net benefit (after required fees) of the New Markets Tax Credit to clients is approximately 22% of net project costs. The New Markets program requires that project owners must also invest some of their own capital in to the project, with the balance coming from traditional bank financing.
Eligible projects include real estate (both new construction and rehabilitation), equipment and working capital. Most projects include a combination of all three elements. The majority of projects are for an existing operating businesses that want to aggressively expand, but lack the necessary internal capital to finance that expansion.
Fees for the firm’s services are paid out of net grant proceeds. The firm requires projects to pay a retainer deposit of $25,000 at the start of the engagement. The retainer deposit is fully reimbursed or credited to clients at closing.
Developing Opportunity
Davis Business Advisory Services, LLC is a New Markets Tax Credit consulting services firm. The New Markets Tax Credit (NMTC) program provides Federal grants to fund a portion of the projects in low income communities. The company is owned by Eric Davis, CPA. Eric provides comprehensive CFO level advisory services for his clients, including: assisting with preparing project budgets, measuring the long term net benefit of the project, acquiring required bank financing, securing NMTC allocation for the project, and training accounting staff with ongoing required financial reporting after closing. Eric also works closely with his client’s CPAs and attorneys as part of the project planning process.
