Enterprise Bank has New Markets Tax Credit financing for projects in low-income areas

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Sep. 21—St. Louis-based Enterprise Bank & Trust has at least $6 million in federal New Markets Tax Credits available in New Mexico to provide gap financing for construction or operating costs in low-income census tracts.

"Santa Fe is clearly an area of focus for us," said Troy McClelland, vice president of tax-credit lending and investing at Enterprise.

Enterprise, which took over Los Alamos National Bank in 2019, has six branches in New Mexico, including three in Santa Fe and one each in Los Alamos, White Rock and Albuquerque. In all, Enterprise has 47 branches in Arizona, California, Kansas, Missouri, Nevada and New Mexico.

The U.S. Treasury Department is targeting 10 states, including New Mexico, with this year's round of $5 billion in New Markets Tax Credits recently allocated to 100 lending institutions, with Enterprise one of only 11 banks included.

The department determined the targeted states based on those that have historically underutilized the tax credit.

Enterprise received $60 million in New Markets Tax Credits with 20 percent dedicated to New Mexico and Kansas, the two federal target states in the bank's service area. Over the years, Enterprise has received $183 million in New Markets Tax Credits, but this is the bank's first round since arriving in New Mexico, McClelland said.

The competitive loans with flexible interest and length terms typically fund projects involving "dormant manufacturing facilities, inadequate education and healthcare amenities, vacant commercial properties," where traditional financing or investors may not be available to cover the full cost, according to the Treasury's Community Development Financial Institutions Fund, which administers the tax credit.

New Markets Tax Credits can help fund affordable-housing projects if they have a commercial element, McClelland said.

"It's a last-resort loan offering flexible terms when loans are not available in traditional lending institutions," he said.

In the past, Enterprise has set aside about 40 percent of its New Markets Tax Credits in a small-business loan fund, an uncommon way to use the tax credits, McClelland said. He said the loans can be as small as $500,000 to finance equipment or other operating costs.

The project or business receiving a New Markets Tax Credit must be located in a census tract with poverty in excess of 20 percent, and the family median income must be 80 percent or less of the area median income, McClelland said.

New Markets Tax Credits are funded by private investors, who receive a 39 percent tax credit over seven years.

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