In the current inflationary and tariff-rich environment, development projects are exploring cost-saving measures to help them continue to move forward. Project owners, companies, and organizations are looking for every opportunity to reallocate funds and value engineering their plans to carry capital investment forward. This is especially true in the manufacturing sector, where costs can be directly impacted by market forces, often beyond an organization’s control.
One way to offset costs is through the New Markets Tax Credit (NMTC) Program. The NMTC Program is a federal economic development initiative designed to incentivize private investment in economically distressed communities. Rather than receive a tax credit, manufacturers receive low-cost funding to help mitigate rising project costs. This is especially powerful when project costs rise and organizational capital is stretched thin, causing wholesale re-evaluation of whether investments are worthwhile. This program offers manufacturers a powerful tool to finance facility expansions, equipment upgrades, or new plant construction—while delivering measurable community impact.
The manufacturing sector is a prime target for NMTC funding due to its potential for job creation, capital investment, and community revitalization. Projects like new plant construction, facility expansion, or equipment upgrades in low-income areas are especially well-suited to take advantage of the NMTC Program as a means to reduce capital costs. However, the benefits do not end with cost savings.
Key Benefits for Manufacturers
- Forgivable Loans: NMTCs often result in loans where a portion of the principal is forgiven after a seven-year compliance period.
- Subsidized Capital: Manufacturers can access below-market, interest-only loans for up to 10–15% of project costs.
- Job Creation Incentives: Projects that create accessible, quality jobs are prioritized.
- Enhanced ROI: NMTCs can significantly reduce the cost of capital, improving project feasibility and returns.
- Community Impact: Projects that create quality jobs and revitalize low-income areas are prioritized.
Not all projects are good candidates for the NMTC Program. To start, a manufacturing project must:
- Be located in a qualified low-income census tract.
- Demonstrate community benefits, such as job creation or workforce development.
- Avoid prohibited uses, e.g., gambling or liquor stores.
There are numerous instances of manufacturing projects that were funded through the NMTC Program. Examples from the NMTC Coalition Project Database include:
- Small Steel Fabricator – Rural Ohio
A locally owned steel fabrication business expanded its operations with NMTC support. The project enabled the purchase of new equipment and hiring additional skilled labor, revitalizing a community hit hard by deindustrialization.
- Specialized Equipment Manufacturer – Dyersburg, Tennessee
This manufacturer used NMTC funding to expand its three-phase transformer plant. The project created 380 permanent jobs and 70 construction jobs, supporting critical infrastructure upgrades for the national electrical grid.
- Food Manufacturer – Cleveland, Ohio
This food manufacturer consolidated and expanded its operations at its existing facility. NMTC financing helped create 80 permanent jobs and supported the company’s commitment to local economic growth.
- Textile & Industrial Laundry Facility – Ridgeland, Mississippi
A regional textile and laundry service upgraded its facility with NMTC funding. The project improved operational efficiency and created accessible jobs for underserved populations.
- Brick Manufacturing Plant – Mangum, Oklahoma
A new brick production facility was built in a rural low-income area. NMTC financing helped offset construction costs and supported long-term job creation in a community with limited industrial activity.
- Bottle Cap Manufacturer – Brooklyn, New York
A small-scale manufacturer serving beverage companies expanded its production capacity. NMTC support enabled equipment upgrades and workforce expansion in an urban-distressed area.
Over the program’s history, more than 8,500 businesses have received funding, many in the manufacturing sector. The above examples demonstrate how NMTCs can serve diverse manufacturing needs—from food processing and steel fabrication to infrastructure components and consumer goods.
Why It Matters
NMTCs can help bridge financing gaps and accelerate your timeline when a rising cost environment is causing significant evaluation of project investment decisions. Without the support of the NMTC Program, many communities would suffer as job creation falters and needed investment faces delays or outright cancellations. The NMTC Program is a critical piece that helps solve funding constraints while promoting community benefit.
How Forvis Mazars Can Help
Our experienced team can also help you with other aspects of the NMTC Program. Whether you’re seeking to understand the program, need sourcing and closing funding, or want to explore how our proprietary TaxCred PRO® for New Markets Tax Credit can help save you time and reduce transaction fees, we can assist. Reach out to our NMTC team today!