Independent analysis for NMTC transactions — whether the project stands on its own economics, and whether the community impact the allocation is justified by can actually be evidenced.
The New Markets Tax Credit is a statutory program under 26 U.S.C. § 45D, and the statute does not prescribe a feasibility study. The requirement comes from the parties: the Community Development Entity has to be satisfied the qualified active low-income community business will still be operating through the seven-year compliance period, the leverage lender is underwriting real debt, and the investor is buying credits whose recapture risk turns on the project surviving.
That is a harder question than a conventional credit. An NMTC project is often in a market a conventional lender has already declined, run by a sponsor without a long operating history, in a building that does not yet exist. The study's job is to say, on evidence, whether the operating business behind the structure is viable — because the tax structure does not make a weak operation strong, it only finances it.
Impact claims are where NMTC narratives are weakest, because they are usually written as intentions. A job count with no staffing plan behind it, a service population with no catchment analysis, an accessibility claim with no transit or distance data — each is easy to assert and hard to defend at closing. We evidence them the same way we evidence revenue: with sources, methods and stated limits.
The report is structured so the CDE's investment committee, the leverage lender's credit committee and the investor's diligence team can each find what they need without reconciling three different documents. Projections are delivered as a fully linked model with no hard-coded outputs, so anyone underwriting the file can stress it themselves rather than taking our word for the result.
Our fee is fixed and quoted before we start. It is never contingent on a favourable conclusion or on the transaction closing — in a structure where several parties are relying on the same third-party analysis, a contingent fee is an unforced credibility problem.
A New Markets Tax Credit feasibility study is not a repurposed conventional underwrite. The NMTC structure introduces layers that a standard cash-flow analysis does not address: the qualified active low-income community business test, the substantially all requirement for qualified low-income community investments, the seven-year compliance period, and the unwind mechanics that follow it. The study must confirm that the project's operating economics are sound across that entire compliance window, not merely at stabilization.
Demand analysis for an NMTC transaction must do two things simultaneously: establish that the underlying business or facility is commercially viable, and document that it serves a genuine community need in a low-income community. Those are related but distinct inquiries, and the data sources differ accordingly.
Commercial viability analysis draws on trade-association data for the specific industry, local and regional employment and wage data from Bureau of Labor Statistics releases, state workforce agency filings, and — where the project is a healthcare or childcare facility — state licensing registries and certificate-of-need records that reveal both existing licensed capacity and approved-but-not-yet-open supply. For manufacturing or industrial projects, utility interconnection queues and economic-development authority announcements identify competing or complementary capacity in the pipeline.
Community-impact analysis draws on American Community Survey tract-level data to characterize income levels, poverty rates, unemployment and access to services. Where the project involves retail or food access, USDA Food Access Research Atlas designations and state health-department records document the gap the project fills. For projects anchored by a single tenant or offtake agreement, the creditworthiness of that obligor is examined through public financial disclosures, audited statements or, where available, state agency procurement records. Competitive-supply work counts only open, licensed and operating facilities — announced projects are tracked separately and stress-tested for probability of delivery.
In a leveraged NMTC structure the leverage lender's debt-service coverage is calculated on a loan that is intentionally sized to be serviced by the project's operating cash flow alone, without reliance on the tax-credit equity. That makes the coverage ratio acutely sensitive to a small number of inputs, each of which is tested explicitly.
The leverage lender in an NMTC transaction occupies a structurally senior position but faces a collateral package that is complicated by the pass-through entity layers required by the credit structure. Credit officers consistently focus on a set of questions that the feasibility study must answer directly.
For SBA-guaranteed leverage loans, the study is prepared to SOP 50 10 8 coverage minimums: 1.15 times on an operating basis and 1.00 times on a global basis. The SBA analysis must treat the NMTC equity contribution as what it is — a time-limited, structure-dependent source — and confirm that operating cash flow alone services the debt. USDA Business & Industry guarantees applied in rural NMTC transactions follow RD Staff Instruction 5001 and require the same discipline: the guarantee is underwritten on project economics, not on the credit subsidy embedded in the tax credit.
Conventional leverage lenders typically require 1.20 times coverage and place particular weight on the post-unwind refinance scenario, because the lender that holds the leverage loan through the compliance period must either be repaid or agree to restructure at unwind. The study addresses this by modeling the project's standalone debt capacity at market terms after year seven, giving the credit committee a clear view of residual risk. Community Development Entities reviewing the feasibility study for their own allocation compliance also look for the community-impact narrative to be grounded in documented, tract-specific evidence rather than general assertions.
The fee is fixed and quoted in writing within one business day of receiving a project description. It does not change if the analysis produces an unfavorable finding, and it is never contingent on the outcome. That structure is not incidental: fiduciary duty in every engagement runs to the lender and the reviewing agency, not to the borrower or the CDE seeking allocation compliance. Determinations are not revised under pressure.
The engagement begins when a complete data room is assembled. For an NMTC transaction the data room should include the project's organizational documents and the proposed NMTC structure chart, three years of historical financials for any operating business, a detailed construction budget and sources-and-uses statement, executed or draft lease and offtake agreements, the qualified opportunity zone or census-tract certification, and any community-impact commitments made to the allocating CDE. Delivery of the bound narrative report, ten-year pro forma and sensitivity workbook follows within 10 to 15 business days of a complete submission; rush delivery is available when transaction timelines require it.
Every engagement is published to a secure client portal where the fully linked Excel workbook — no hardcoded values — remains live after delivery. A credit officer or CDE analyst can change any input and watch every ratio recalculate in real time. When a lender's credit committee requests a revised scenario, the model accommodates it without a new engagement, and the portal log preserves a record of every version reviewed.