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Federal Reserve Bank of Cleveland
Community Reinvestment Forum
The New Markets Tax Credit Program: will it live up to its potential?

Because many small businesses in isolated inner-city or rural locations are cut off from mainstream capital networks, a new conduit for channeling equity capital is needed—patient capital that can be used to grow a business and manage risks in less diversified economies. Many believe the New Markets Tax Credit Program, which aims to stimulate $15 billion in private equity investment in low-income communities, can provide such a conduit. While the program has many strengths, it is still too early to tell whether it will live up to its promise because the initial investments are just beginning to unfold. But the availability of another community development tool using private-market capital ensures that organizations will continue to seek creative solutions to the problems that distressed communities face.

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anonymous, "The New Markets Tax Credit Program: will it live up to its potential?" , Federal Reserve Bank of Cleveland, Community Reinvestment Forum, issue Fall, pages 1-20, 2003.
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Keywords: Tax credits; Small business; Community development
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