How will the CDE use the equity that qualifies for the New Markets Tax Credit?
The CDE must use at least 85 percent of the cash infusion to make a “qualified low-income community investment” (a Qualified Investment). A Qualified Investment includes 1) a capital or equity investment in, or loan to, a “qualified active low-income community business” or a qualified CDE, 2) the purchase of a loan made by another qualified CDE to a qualified active low-income community business, or 3) the provision of financial counseling and other similar services to businesses and residents located in low-income communities. There are no limits on the use of the remaining 15 percent of the equity raised by the CDE.
