Enterprise Bank has a New Markets Tax Credit to Fund Projects in Low Income Areas
September 21 — St. Louis-based Enterprise Bank & Trust has at least $ 6 million in federal new business tax credits available in New Mexico to provide additional funding for construction or operating costs in the areas low income census.
“Santa Fe is clearly an area of interest to us,” said Troy McClelland, vice president of tax credits and investments at Enterprise.
Enterprise, which bought Los Alamos National Bank in 2019, has six branches in New Mexico, including three in Santa Fe and one in Los Alamos, White Rock and Albuquerque. In total, Enterprise has 47 branches in Arizona, California, Kansas, Missouri, Nevada and New Mexico.
The US Treasury Department is targeting 10 states, including New Mexico, with $ 5 billion in new business tax credits this year recently allocated to 100 lending institutions, with Enterprise being one of 11 banks included.
The ministry determined the targeted states based on those that have historically underused the tax credit.
Enterprise received $ 60 million in new market tax credits, 20% of which goes to New Mexico and Kansas, the two target federal states in the bank’s service area. Over the years, Enterprise has received $ 183 million in tax credits for new markets, but this is the bank’s first round since moving to New Mexico, McClelland said.
Competitive loans with flexible interest and term terms typically finance projects involving “dormant manufacturing facilities, inadequate education and health facilities, vacant commercial properties”, where traditional financing or investors can. not be available to cover the full cost, according to Community Development Treasury. Financial Institutions Fund, which administers the tax credit.
New market tax credits can help fund affordable housing projects if they have a commercial element, McClelland said.
“It is a loan of last resort offering flexible terms when loans are not available from traditional lending institutions,” he said.
In the past, Enterprise has set aside about 40% of its new business tax credits in a small business loan fund, an unusual way to use tax credits, McClelland said. He said the loans can be as small as $ 500,000 to finance equipment or other operating costs.
The project or business receiving the New Markets Tax Credit must be located in a census tract where poverty exceeds 20 percent, and the median family income must be 80 percent or less of the median income of the region, McClelland said.
Tax credits for new markets are funded by private investors, who receive a 39% tax credit over seven years.