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Small Business Tax Credits

By Dee Clemmons

Community Development Entities

A CDE, or Community Development Entity, must meet certain criteria to qualify for its designation:

  1. It should be a domestic corporation.

  2. Its primary mission must be to serve or provide capital to low-income communities or people.

3. It should maintain accountability to residents of low-income communities through representation on governing or advisory boards. 

4. It must obtain and maintain CDE certification through the CDFI Fund at the Department of Treasury. 

CDEs are often affiliated with mission-driven organizations, such as CDFIs, for-profit entities, community development corporations, government entities, or banks. They create a high-impact business plan and apply to the CDFI Fund for NMTC (New Markets Tax Credit) allocation. Once approved, they can raise equity from investors and use it for projects in low-income communities. ​

New Marketing Tax Credit 

The New Markets Tax Credit (NMTC) Program is a federal financial initiative established within the United States. Its primary objective is to invigorate economic growith and encourage investments in low-income communities across the nation. 

The Community Development Financial Institutions Fund (CDFI) is a division of the United States Department of the Treasury. It collaborates with local Community Development Entities (CDEs) distributed throughout the country. These CDEs are responsible for allocating the tax credits accordingly. 

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