An Opportunity Zone is an economically-distressed community, or neighborhood, where new investments, under certain conditions, may be eligible for preferential tax treatment. Investors can defer and reduce taxes on prior capital gains by investing in a Qualified Opportunity Fund that invests in real estate or businesses within a zone. The SBA, however, has recently announced special care when it comes to loans in Opportunity Zones.
According to the SBA, any 504-eligible project in an Opportunity Zone (whether it has investment from a Qualified Opportunity Fund or not), can now take advantage of the newly relaxed job creation or retention requirements just announced. Now the economic development requirement is one job created per $85,000 of SBA financing in the project, if the business is in an Opportunity Zone. This is an increase from the usual threshold of $75,000 per job created.