A loan fund being established with $9.7 million from the U.S. Department of the Treasury will benefit small businesses and entrepreneurs in Minot, according to the president of the Minot Area Development Corp.
Jerry Chavez said the fund will provide financing for businesses that don't always have access to adequate capital through other sources.
"We will have other financing in the tool chest, particularly venture capital," he said. "The intent is for 75 percent of those funds to be in a traditional loan program and the other 25 percent will be through venture capital."
The fund is part of the Small State Business Credit Initiative. The initiative is a joint venture of 38 communities, ranging in size from 56 people in Sentinel Butte to 105,549 people in Fargo. Member cities include Bismarck, Crosby, Dickinson, Garrison, Hazen, Killdeer, Mandan, McClusky, Turtle Lake, Underwood, Watford City, West Fargo and Williston. Total population in the consortium is 317,076.
Lewis and Clark Regional Development Council in Mandan is the administering agency.
The Minot City Council approved the closing documents to ensure the city's participation in the initiative at a special meeting Wednesday. Aldermen named Chavez to the initiative's steering committee and selected Chavez and city finance director Cindy Hemphill to represent the city on the loan fund board.
The steering committee is charged with developing the program guidelines, underwriting and other criteria.
Chavez said MADC sees a number of small businesses that can't get adequate funding from traditional sources or the MAGIC Fund that could benefit from the new loan fund.
"I see this as a great tool to help a lot of our mid-size companies that want to come in," Chavez said. There's also potential to help promote the business ideas of people working with the entrepreneurial institute at Minot State University or to assist flood-damaged businesses with recovery, he said.
Chavez said there's business interest in venture capital, which currently isn't easily accessible in western North Dakota. A venture capital fund can make different types of investments, such as taking equity positions in a new company. It is useful for companies that don't have access to more traditional sources of capital because of their higher level of risk.
Financing from the loan fund also can help businesses leverage other sources of capital, he said.