Can a Small Business Use the New Markets Tax Credit?

Yes, but not by claiming the credit itself. The New Markets Tax Credit goes to investors in Community Development Entities (CDEs), and those CDEs lend to or invest in businesses in low-income communities, often on better terms than a regular bank loan. A small business in an eligible census tract asks a CDE that serves its area for this financing; it does not apply to the CDFI Fund.

$5 billionThe 2025 tax law made the credit permanent at $5 billion of allocation authority a year.
$91 billionFrom the first round in 2002 through the end of 2025, the program awarded $91 billion in allocation authority.
39%Investors get a credit worth 39% of their investment in a CDE, claimed over seven years.
$500,000Farming businesses are left out once their farm assets top $500,000.

The New Markets Tax Credit (NMTC) brings private money into low-income communities. The U.S. Treasury's CDFI Fund gives tax credit authority to Community Development Entities, or CDEs, through a competition. Investors put money into a CDE and get a federal tax credit. The CDE uses that money to make loans and investments in businesses and real estate projects in low-income areas.

The 2025 tax law made the credit permanent at $5 billion of allocation authority a year. The CDFI Fund opened the 2026 round on September 17, 2026, with CDE applications due November 10, 2026, and lists fall 2027 for the award announcement. From the first round in 2002 through the end of 2025, the program awarded $91 billion in allocation authority.

Last checked: November 13, 2026. This page explains the rules only. It is general information, not legal, tax, or financial advice.

The short version

The credit goes to investors, not to your business. Investors get a credit worth 39% of their investment in a CDE, claimed over seven years.
Your business gets the financing. The CDFI Fund says CDE loans and investments often come with lower interest rates, lower fees, higher loan-to-value, longer terms and other flexible features.
Location matters. Your business must operate in a census tract that meets the program's low-income test (see the FAQ).
You don't apply to the government. The CDFI Fund says businesses should not seek CDE certification and should contact CDEs directly.
Each CDE picks its own deals. Investment decisions are made at the community level, so whether a small project fits depends on the CDE.

Who qualifies

Under 26 U.S.C. 45D and Treasury regulations, a business that receives NMTC financing (a qualified active low-income community business) must:
Be a corporation, nonprofit corporation or partnership. A sole proprietorship also counts if it would pass the tests as a corporation.
Earn at least half of its gross income from actively running a business in a low-income community.
Use a substantial part of its tangible property, and have its employees do a substantial part of their work, in a low-income community.
Hold little in collectibles or passive financial assets.
Not be an excluded business. That rules out golf courses, country clubs, massage parlors, hot tub and suntan facilities, racetracks and gambling facilities, liquor stores, residential rental property, and businesses that mainly develop or hold intangibles for sale or license. Farming businesses are left out once their farm assets top $500,000.

How to get it

How to get started

Look up your census tract in the CDFI Fund's CIMS mapping tool to see whether it meets the NMTC low-income test.
Find CDEs that serve your state with the CDFI Fund's NMTC Allocatee States Served map or its Searchable Awards Database.
Write a one-page project summary: what you will build, buy or expand, the total cost, your other financing, and the jobs or community services it will bring.
Contact several CDEs. Ask about minimum project size, rates and terms, fees, timing, and which kinds of businesses they finance.
If a CDE wants to move ahead, bring in your accountant and lawyer. The credit period runs seven years, and the CDE will need you to keep meeting the business tests and report on them.
If your need is small, also look at local CDFIs, SBA microloans and USDA business loans.

Programs that may match

Look beyond

What are Opportunity Zones 2.0, and where are the new zones?.SBA microloan requirements.Requirements for a USDA business loan.Can a business get an EDA grant?.Manufacturing grants and incentives in 2026.See which other programs may fit your business with FundPlenty's free match at fundplenty.com.

FAQ

Can my business claim the New Markets Tax Credit itself?

No. Investors who put money into a CDE claim the credit. Your business benefits by getting a loan or investment from that CDE.

What is a low-income community for the New Markets Tax Credit?

Under 26 U.S.C. 45D, it is generally a census tract with a poverty rate of at least 20%, or with a median family income no more than 80% of the state or metro median. The CDFI Fund's CIMS mapping tool shows which tracts meet the test.

Is the New Markets Tax Credit still available in 2026?

Yes. The 2025 tax law made it permanent at $5 billion a year. The CDFI Fund opened the 2026 round on September 17, 2026, with applications from CDEs due November 10, 2026. CDEs that won earlier rounds are listed in the CDFI Fund's awards database.

What kinds of businesses get NMTC financing?

The CDFI Fund lists manufacturing, food, retail, affordable housing, healthcare, technology, energy, education and childcare among the business and project types it supports.

Should my business apply for CDE certification?

No. The CDFI Fund says CDE certification is for community development lenders and investors. Businesses looking for NMTC financing should contact CDEs directly.

How long does the New Markets Tax Credit last?

Investors claim the credit over seven years: 5% of their investment a year for the first three years and 6% a year for the last four, which adds up to 39%. Ask each CDE how its loan or investment terms line up with that period.