Borrowers
Unique to the industry, the Smith NMTC Model aggregates multiple Qualified Active Low-income Community Businesses (QALICBs) in one transaction to deploy Qualified Low Income Community Investments (QLICIs) as small as $500k per transaction to build a threshold of $5M or higher; keeping transaction costs low, because the QALICBs share the costs, and benefits to QALICBs high. Streamlining due diligence and systemized processes of the Smith NMTC Model also significantly reduces transaction costs.
The multi-QALICB NMTC model we have created with the help of all of our participants strives to be as simple as possible in a very complicated program. We have mitigated the risk as much as possible by making the model “closed loop.” This closed loop feature eliminates the need for outside financing (apart from a Day Loan – which we have available); and therefore reduces the exposure that is typically coupled with leveraged debt.
Smith NMTC works with QALICBs throughout the seven-year compliance period to align accounting procedures; facilitate, organize and transmit compliance to the Tax Credit Investor as well as the CDE; fund professional costs for all of the entities; and thereafter roll up the transaction. An integral part of Smith NMTC’s involvement with smaller nonprofit QALICBS is its guaranty of the QALICB risk in the transaction. This guaranty “balances” a very complex transaction by permitting the small nonprofit QALICB to continue to do what it does best, the building of communities; while leaving the complex reporting, accounting and asset management to our team.
