Financing That’s Too Good to Be True — But Is

How would you like to get a loan with an interest rate 1% to 2% lower than you’d likely be able to get otherwise, with a seven-year term during which you don’t have to repay any principal — and even then you’ll have to pay back only 80% of what you borrowed?

You may be skeptical, but such loans actually exist — that is, for borrowers who need the financing to start or expand a business, or develop a project, that will provide economic, social, or environmental benefit to a low-income area.

The vehicle through which the advantageous leverage is available is the New Markets Tax Credit Program (NMTC), a complex federal undertaking that provides investors — usually banks and other businesses — with tax credits as incentives to bankroll such initiatives. The program addresses the fact that conventional investors typically overlook low-income communities....

Read the full article at CFO.com