Alongside healthcare, domestic manufacturing has emerged as a significant area of opportunity for NMTC financing. Federal policy initiatives continue to emphasize supply chain resiliency, domestic production capacity and job creation in economically distressed communities. The Treasury has likewise identified domestic manufacturing as a key priority for future NMTC investments, reflecting broader national economic development goals. Manufacturing projects often achieve many of those goals, combining substantial capital investment with the creation of large numbers of high-quality permanent jobs and workforce development opportunities in areas of the country that need them most, thus making these projects ideal candidates for NMTCs. As a result, the program has been used to support projects ranging from advanced manufacturing facilities and food processing plants to industrial modernization initiatives, distribution and logistics centers, critical supply chain infrastructure and the redevelopment of vacant industrial properties.
Many manufacturers in rural and low-income areas are unable to access the capital required to modernize or expand their operations in response to evolving market conditions. NMTC financing can help reduce overall capital costs while encouraging companies to locate or continue operating in facilities in underserved communities where their investment can result in major lasting economic impacts.
While manufacturing projects are often good candidates for NMTCs, the transactions are complicated and frequently involve multiple incentive programs coming together to create the greatest economic benefit to the project and surrounding communities. NMTC financings may be combined with some bonds, state economic development incentives (including state new markets tax credits where available), grants, historic rehabilitation tax credits, Opportunity Zone incentives and other financing mechanisms. As a result, successfully coordinating these programs requires careful attention to transaction structure – timing and compliance obligations before financing, during closing and throughout the seven-year NMTC compliance period.
As manufacturers evaluate expansion, modernization and reshoring opportunities, NMTC financing should be considered early in the planning process. Doing so allows project sponsors to identify eligibility issues, coordinate complementary incentives and maximize available financing benefits. Utilizing experienced NMTC counsel is essential to successfully navigating these challenges and setting the project, and the community, up for long-term success.
Butler Snow attorneys Julia Fendler, Ann Hered and Thane Hodson have extensive experience representing borrowers in the manufacturing space, helping clients navigate complex transactions and capitalize on available financing opportunities.
