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The New Markets Tax Credit program (NMTC) has been a game-changer in transforming communities, driving economic growth, and fostering development in low-income and distressed areas.
To get a better idea of the power of this program and how it aligns with Dakota Business Lending’s (DBL) mission, we sat down with their President & CEO, Steve Dusek.
Let’s see what he has to say about the transformative impact of NMTC and DBL’s role in revitalizing communities across North Dakota…
Q: Give us a brief overview of the NMTC program. What is it and what are its primary objectives?
The NMTC program is a way to monetize tax credits and provide capital for the benefit of small businesses. Its primary objective is to help revitalize low-income and distressed areas by injecting capital and providing little to no-cost capital for businesses to grow, expand, and add jobs.
Each Community Development Entity or CDE (like DBL) has a slightly different goal, but our focus is investing in small businesses that transform low-income and distressed areas by providing accessible and quality jobs.
Q: How did DBL become involved with NMTC and how does this program fit into their mission?
The NMTC has been around for over 20 years, and in those 20 years, North Dakota has never had a state-based entity delivering tax credits. DBL saw this as an opportunity for our small businesses.
The program fits well with our mission to be a premier small business resource in our footprint. It allows us to support larger projects beyond the capacity of the SBA 504 loan program, helping even more businesses grow, expand, and impact our local communities.
Q. Tell us about the NMTC playing field in ND. What makes this program so powerful for small businesses in the state?
The NMTC program is powerful because small businesses in ND have never had access to a program like it before. The NMTC program is powerful because small businesses in ND have never had access to a program like it before. NMTC is unique because it provides lower interest financing that converts to equity for the business after 7 years.
Q. What are the unique challenges businesses face that NMTC helps address?
NMTC reduces the amount of capital businesses need to put in, providing a capital stack and making previously infeasible projects possible. It also allows businesses to access capital without having to seek out other investors. Because these projects directly inject equity into small businesses without the need for repayment, it offers a solution for expensive and hard-to-find funding.
Q. Describe the overall economic impact NMTC has had on communities in ND.
To date, DBL has allocated $60M in tax credits to seven small businesses located in Fargo and Bismarck, ND. These projects have created/retained a total of 556 quality and accessible jobs in those communities, all in low-income and distressed areas that need it most.
Q. How do you measure the success and impact of NMTC projects on local economies and communities?
DBL measures success through tangible community benefits, with a focus on investing in low-income and distressed areas and creating accessible and quality jobs. We use third party econometric modeling to assess the short-term impacts such as construction jobs and long-term effects like job creation and retention. Every NMTC project has a Community Benefits Agreement that helps us track these metrics and determine actual benefits as a result of the investment.
Q. Tell us about the role that partnerships with banks, leverage lenders, and other lending institutions play in NMTC and why their involvement is crucial.
Community banks are a critical piece of the NMTC program and can participate in two ways: as leverage lenders or as tax credit investors.
Every project has a leverage lender that helps us get the project done. Not only do these lenders get to make a loan at current rates, giving them a return on investment, but they are able to bring a capital option to small businesses that they wouldn’t have historically been able to.
Community banks can also invest in tax credits and have a return on investment, infusing that capital in North Dakota.
We have been partnering with community banks wherever and whenever we can to educate them on these opportunities and how they can get more involved.
Our Partners at the Bank of North Dakota
Our partners at Bank of North Dakota are huge supporters of DBL and play a significant role in our NMTC efforts. Their partnership is invaluable, and we look forward to forming partnerships like this one with many other entities throughout the state.
Q. What future opportunities do you see for expanding DBL’s NMTC program and partnerships?
DBL plans to make application for tax credits on an annual basis and continue growing the program in North Dakota. We are also exploring the potential of expanding the program to the rest of our footprint in Montana and Minnesota as well.
We are working to educate and grow our partnerships with economic developers, city leaders, statewide organizations, and community banks so we can help even more small businesses. Even now, we’ve seen that the more projects and educating we do, and the more experience we have, the more that people want to get involved. From there, this program and all of our partnerships will only continue to grow.
For more information about the NMTC program and to get involved, visit our webpage.
