Local Lenders Stay Sidelined as Cash Flows to Opportunity Zones

Lenders that have historically provided capital to underserved areas—the focus of the opportunity zone tax breaks—have struggled to get involved in the burgeoning market for the tax-advantaged investments.

Of the 1,100 community development financial institutions across the country, just a handful have managed to participate, and they cite a laundry list of barriers, including an inability to take investments themselves. Elements of the policy’s design and related IRS rules have shut out these institutions or made their work leveraging the incentives harder, community development professionals say—all while opportunity funds, whose investors reap the tax breaks, have raised billions of dollars ...