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Missouri Senate Pledges to Help Disadvantaged Communities

Missouri Senate Pledges to Help Disadvantaged Communities

The Missouri Senate recently passed a bill extending the New Markets Tax Credit Program, an initiative that provides a tax break for private equity firms that support businesses located in areas with high poverty rates or lower-than-average incomes.

The New Markets Tax Credit Program (NMTC Program) was head started by Congress in 2000, and has since provided over 660 awards totaling more than $33 billion, including $3 billion towards awards for the Recovery Act. Administered by the U.S. Department of Treasury, the program distributes tax credits to qualified Community Development Entities (CDEs) who must distribute funds to distressed communities over a designated seven-year period. One of the top NMTC Program beneficiaries, Advantage Capital Partners, has been allocated $524 million through eight separate grants. This capital has enabled the firm to support businesses in over 150 struggling communities, and provide thousands of jobs to local residents.

In 2011, ACP provided $5.7 million worth of financing to Barton Nelson, a family-owned business of 50 years, and one of the top 25 manufacturers of specialty advertising products in the country. The funds provided the company with the opportunity to grow, and retain jobs in Kansas City, Missouri—an area that was adversely affected by the economic downturn. Similarly, $3.2 million in New Markets funding given to Theil Tool & Engineering—a woman-owned business located in a disadvantaged region in northern St. Louis—allowed the company to retain 50 jobs, and expand business prospects.

The NMTC Program passed by the Missouri Senate mirrors the existing program on the federal level, and would provide $15 million of tax credits per year for the next six years.

“The Missouri New Markets Development program plays a crucial role when a small business is seeking to obtain adequate financing in this economic climate,” said Rick Hummell, principal at Advantage Capital Partners.

NMTC Programs have been established in 14 states, and legislation has been introduced to establish the program in an additional 8 states.

Sources: Community Development Financial Institutions Fund, Advantage Capital Partners 

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