New Markets Tax Credit – Empowerment Reinvest Fund, LLC

TruFund Financial leverages and invests New Markets Tax Credit (NMTC) allocation in projects that encourage economic development in low-to-moderate income (LMI) communities

Empowerment Reinvestment Fund LLC (ERF) is the subsidiary of TruFund that is a certified Community Development Entity (CDE) qualified to receiveNMTC allocations.

Since 2003, ERF has been awarded $280 million in NMTC allocations from the Community Development Financial Institution (CDFI) Fund. This highly competitive award is a part of the NMTC Program, enacted by Congress in 2000 to encourage economic development investment in low-income communities nationwide.

*Jobs recorded above consist of temporary construction jobs, indirect jobs, and direct jobs.
Total Allocations $315,000,000
Total Investments $311,000,000 (closed and committed)
Total Projects 38
Jobs Created 8,000+
Total Sq Ft Built 3,200,000 sf
Low Income Individuals Served 117,000+
States Impacts 17

In line with ERF’s strategic priorities, these projects create and promote:

Through New Markets Tax Credit allocation, TruFund Financial Services, Inc. has a commitment to support projects in our footprint states of Alabama, Louisiana, New York, Georgia, and Texas as well as projects in rural and underserved states.

Targeted Investment

  • Severely Distressed Tracts – 67 percent of investment
  • Underserved States – 34 percent
  • Education and healthy food options to low-income residents
  • Non-metro & Rural Communities – 22 percent

Geographic market

Through New Markets Tax Credit allocation, TruFund Financial Services, Inc. finance projects nationwide and have a strong commitment to support projects in our footprint states of Alabama, Georgia, New Jersey, New York, Louisiana, and Texas as well as projects in rural and underserved states.

Eligible Businesses

Federal guidelines require that investments meet two criteria. First, they must be located in low-income communities, defined as having a median income below 80 percent of the median income in the surrounding area. Second, projects must show that they provide substantial services to their communities or that they are located within that community.

ERF will target non- and for-profit borrowers that engage in transactions in four key areas, which include: (1) large-scale job development projects; (2) projects that support small business development; (3) projects that enhance the capacity of minority-serving institutions and community facilities; as well as (4) anchor real estate projects that act as catalysts for community development in low-income neighborhoods.

In all cases, ERF seeks to leverage other TruFund resources into these projects.

Protection for ERF Investors

ERF follows the same extensive due diligence procedures developed for TruFund’s other loan funds. The financial components of each transaction and the financial history of each participant are carefully reviewed to ensure that the interests of the investors are protected.

Benefits to Investors

Low-interest, high-return: In return for a qualifying investment, investors will receive a 39 percent tax credit over seven years for each dollar invested plus negotiated economic return.

  • Investors may claim a tax credit of five percent of the total value of the investment during each of the first three years and six percent on the total value of investment for each of the final four years of the credit period, for a total of 39 percent
  • Investors will receive an additional return on their investment, usually in the form of interest on indebtedness, as well as the return of principal at the end of the seven-year investment period
  • Alternatively, investors may choose to purchase only the tax credits or to finance the entire project

Benefits to the Community

All loan documents contain community covenants that require all parties involved in the project to work together to leverage other resources and to develop programs to enhance its community impact.


New Markets Tax Credit Loans

The New Markets Tax Credit Loan (NMTC) Fund is designed to provide small businesses with access to capital.

Terms and Conditions

  • Locations: NMTC-eligible census tract locations across the United States
  • Amount: $250,000 – $1 million
  • Loan Structure: Term loans
  • Terms: 5 years
  • Interest Rate: 6.5%

Eligibility

  • Credit: Must have a 600 FICO credit score
  • Minimum Debt-Service Coverage Ratio: 1.1x
  • Repayment terms: Interest only period of 12-60 months; principal amortization up to 15 years; full payment due at maturity
  • Business requirements: Business must have been in operation for at least two years

Business owners must have positive equity in the company and previous 24 months positive EBIDTA. Business can not be a start-up and must have a maximum single customer concentration of 50%. NMTC loans can be used for equipment, leasehold improvements, inventory, working capital, or refinance.

For assistance and more information contact one of our NMTC Loan Fund program experts in your area.

TruFund Revolving Loan Fund

TruFund’s Revolving Loan Fund operates under the umbrella of our NMTC program and provides funding for: working capital, equipment purchases, refinancing, inventory, and real estate acquisition and development. Types of businesses eligible for this loan include but are not limited to: healthcare, education, manufacturing, retail, technology, affordable and supportive housing, engineering, and construction. Funding is not available for start-ups.

Terms and Conditions

  • Locations: All states in the United States
  • Amount: $250,000 – $1,000,000 (up to $2 million on an exception basis)
  • Loan Structure: Term loans
  • Terms: 5 years
  • Amortization: Up to 15 years – an interest-only period may be extended based on project type, cash flow needs, and source of repayment
  • Interest Rate: 6.5%
  • Application Fee: None
  • Closing Fee: None

Eligibility

  • Credit: Must have a minimum credit score of 600 with no bankruptcies in the past three years
  • Minimum Debt-Service Coverage Ratio: 1.1x
  • Collateral requirement: 70% of funds must be collateralized by real estate; personal guarantees on shareholder’s with 20% or more ownership

If seeking funds for real estate acquisition and development (maximum 90 percent loan-to-value), the property must either be owner-occupied or meet substantial rehabilitation test.


15 Years of New Markets Tax Credit Impact Report