FAQs
How do Opportunity Fund's loans help communities?
- We provide early stage predevelopment money, which helps nonprofits get an affordable housing or community facility project off the ground.
- We fill the gap created by the ever-present shortfall between the debt and equity available for a project and the project cost.
- We work with both newer and more sophisticated developers. We assist new developers through the financing process, building their capacity to increase their impact on the communities they serve.
- We provide fast and flexible financing solutions that allow our borrowers to act fast and compete in the marketplace when an opportunity arises.
What type of loans does Opportunity Fund provide?
- We provide a variety of loans to be used for site acquisition, predevelopment, construction, and mini-permanent financing for affordable housing or community facilities.
- We offer competitive pricing with terms of up to five years. Our short-term capital is lent at interest rates ranging from 0% (through the Sobrato Affordable Housing Fund) to prime, fixed. This rate can vary based on the borrower's history, term of the loan, sources of capital, and market conditions. Opportunity Fund is committed to finding the best rates and terms for our borrowers.
- Financing is available for projects located throughout Santa Clara, San Mateo, and Alameda Counties, as well as in contiguous counties.
Where do Opportunity Fund's loans come from?
- Opportunity Fund pools money from its member banks and makes these funds available to nonprofits and for-profits involved in real estate development serving low-income communities. Opportunity Fund also serves as the Fund Manager for the Sobrato Affordable Housing Fund, which finances exclusively development of affordable housing. The success of Opportunity Fund's affordable housing and community facilities program comes, in part, from this mix of financing sources.
- To meet the needs of nonprofit developers, much of the funding that Opportunity Fund provides is available to borrowers at below-market rates.
- A loan committee made of bankers and community representatives reviews each loan.
What are the eligibility requirements?
What is the New Markets Tax Credit?
- The New Markets Tax Credit (NMTC) Program is a $15 billion federal program created by Congress in 2002 and managed by the Treasury Department’s CDFI Fund. The NMTC program is designed to encourage private capital investment in low-income communities. Opportunity Fund was one of the first organizations in the country to receive an allocation of credits.
- The NMTC Program provides tax credits to investors who make “qualified equity investments” in privately managed investment vehicles called “community development entities,” or “CDEs.” CDEs, such as the Opportunity Fund New Markets Fund, then invest the proceeds of the qualified equity investments in low-income communities.
- The tax credit provided to the investor totals 39% of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is 6% annually. Investors may not redeem their investments prior to the conclusion of the seven-year period.
What are the criteria for applying for financing through the New Markets Fund?
- Opportunity Fund’s New Markets Fund focuses on high-impact anchor projects in low-income communities that are real-estate secured. Opportunity Fund’s minimum loan size for a NMTC project is $3 million.
- Low-income communities are defined as those census tracts with poverty rates of greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income.
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