SERVICE 05 — CAPITAL SOURCING & ADVISORY
How do you fund a project the market won't finance on its own?
nSCALE structures and secures capital for catalytic community projects — identifying, layering, and closing the gap between what a project costs and what conventional financing will support. That includes New Market Tax Credits (NMTC), grants, tax credit equity, and mission-aligned debt and equity.
02 — WHAT WE DO
What does capital sourcing and advisory include?
Capital sourcing and advisory means nSCALE builds and manages the relationships with investors, lenders, and grant sources; structures the capital stack — debt, equity, grants, and tax credits; and manages due diligence so a client without an in-house finance team can still raise money on a complex, mission-driven project.
- Outreach and relationship management — building and maintaining a list of potential investors, lenders, and partners; running outreach and tracking responses; preparing briefing documents; and coordinating investor site visits and presentations.
- Financial strategy and structuring — advising on capital structure (equity and debt), helping set investor terms, and revising the feasibility report, demand assessment, and investment prospectus as the deal evolves.
- Due diligence and data room management — preparing due-diligence materials, standing up and managing an investor data room, and fielding investor questions directly.
- Regulatory guidance — advising on the compliance requirements that come with each funding source, from CDE reporting to grant compliance.
This is billed as an ongoing advisory engagement, not a one-time deliverable — most clients keep nSCALE engaged through closing and into the compliance period, because a layered capital stack needs active management, not a single report.
03 — NEW MARKET TAX CREDITS (NMTC)
What are New Market Tax Credits and how can they fund your project?
The New Markets Tax Credit (NMTC) program is a federal incentive that pulls private investment into low-income communities by giving investors a 39% tax credit, claimed over seven years, for lending into a project through a Community Development Entity (CDE). It is not a grant — it's a below-market, interest-only loan structure, and the CDEs that control the allocation win it competitively, at under a 20% success rate.
A CDE wins a limited pool of tax-credit allocation from the U.S. Treasury's CDFI Fund, then relends that money at below-market rates into an eligible project in a qualifying low-income census tract. Because of transaction costs, the real net subsidy a project sees is typically about 20% of total project cost — the rest of the capital stack still has to come from elsewhere. The deal runs on a 7-year compliance period with ongoing reporting, and at the end the developer typically pays a small "put" fee to unwind the structure and take full ownership.
On historic buildings, NMTC can also be paired with the Historic Tax Credit (HTC) — a 20% federal credit on qualified rehabilitation costs — in a strategy known as "twinning," where NMTC covers the broader project costs and HTC covers the rehab-specific costs. It's a well-established approach for historic buildings in low-income communities, though not every project qualifies or requires it.
04 — COMMON QUESTIONS
Common questions about capital sourcing
What is capital sourcing and advisory?
nSCALE helps mission-driven clients identify, structure, and secure the capital needed to fund catalytic community projects — including equity, debt, grants, and tax credit financing. We work alongside the project team to build a capital stack that closes the gap between what a project costs and what it can support on its own.
What are New Market Tax Credits (NMTC)?
The New Market Tax Credit (NMTC) program is a federal tax incentive designed to attract private investment to businesses and real estate projects in low-income communities. It allows individual and corporate investors to receive a tax credit against their federal income tax in exchange for making qualified equity investments in Community Development Entities (CDEs). nSCALE can help determine whether your project qualifies and structure the financing to access NMTC allocation.
How does nSCALE structure a capital stack?
We layer sources — grants, low-interest debt, tax credit equity (NMTC, LIHTC, historic), conventional debt, and sponsor equity — to minimize the cost of capital and maximize project feasibility. The structure depends on the project type, location, sponsor strength, and available incentive programs.
Can nSCALE help with grant applications?
Yes. We identify applicable federal, state, and philanthropic grant programs, prepare applications, and manage reporting. We focus on grants that align with the project's community development goals and that can be layered into the capital stack without creating compliance conflicts.
What types of projects benefit most from capital sourcing?
Projects in low-income or underserved communities — affordable housing, community health centers, food access, education facilities, and mixed-use developments with a community anchor — typically benefit most, because they can access the widest range of incentive programs.
Is an NMTC allocation a grant?
No. It's a below-market interest-only loan structure that runs through a Community Development Entity. The investor gets a tax credit; the project gets patient capital at rates and terms a conventional lender wouldn't offer. There's a 7-year compliance period with ongoing reporting obligations, and a small fee to unwind the structure at the end.
Can NMTC and Historic Tax Credits be combined?
Yes — this is called "twinning." NMTC covers a broad set of project costs; HTC covers rehabilitation-specific costs on a certified historic building. Combined, they can bring tax-credit equity to 30% or more of total project cost on the right kind of historic, community-serving redevelopment.
How long does an NMTC deal take to close?
Once a project is shovel-ready and paired with a CDE that has allocation, closing typically takes about 12 weeks. Getting to "shovel-ready" — entitlements, a complete feasibility study, and a CDE relationship — is the part that takes longest, often a year or more.