While not-for-profit health care organizations may not have federal tax liability and can’t directly use NMTCs, they could still benefit from the NMTC financing structure.
An NMTC investor with federal tax liability can receive the credits generated from the structure by making qualified investments in an NMTC-eligible community. The invested equity flows through the NMTC structure and ultimately to a qualified low-income community business (QALICB) or project, which is generally a subsidiary or a business segment of the health care organization.
The QALICB can receive the benefit of the NMTC structure in the form of either equity or low-interest rate loans, with low-interest rate loans being a commonly preferred vehicle. The health care organization can then use the loan proceeds to complete their project, install equipment, or for working capital.