Business Accelerator Fund proposed to spin off from MAGIC Fund
Proposed loan fund for small business would draw from MAGIC Fund
Minot and area businesses would gain access to a new loan fund for start-ups and expansions under a proposal that goes to the MAGIC Fund Screening Committee Friday.
The committee meets at 7:30 a.m. in Minot City Hall.
The request is for $1 million for a Business Accelerator Fund, which would be managed by Souris Basin Planning Council. Half the money would come this year and half in 2020. The money would leverage a minimum of $1.9 million in state PACE and Flex PACE funding for entrepreneurs.
Lyndsay Ulrickson, executive director for SBPC, said the proposed fund is geared to smaller, non-primary sector businesses that don’t necessarily qualify for a direct MAGIC Fund loan.
“That’s where we are really missing out is with those small businesses,” she said. “They need to have funding that they can access a little bit easier that’s available for non-primary sector businesses.”
Eligible projects would include business start-ups and expansions, new or expanding, non-residential childcare projects and new affordable multi-family housing units. These are entities eligible under the PACE and Flex PACE interest buydown programs, and the goal is to match recipients of those programs with up to $70,000 from the Business Accelerator Fund.
The BAF generally would be limited to three years of PACE or Flex PACE interest buydown, which means BAF loans would begin to be repaid after that time. The interest rate would be between 1 and 5 percent, and loan terms would run five to 10 years.
Eligible loan recipients could include individuals and public or private entities in Bottineau, Burke, McHenry, Mountrail, Pierce, Renville and Ward counties. Seventy percent of the fund would need to be loaned within the city of Minot.
The SBPC Loan Review Committee would analyze the requests and make recommendations to the organization’s board of directors for approval or denial. The BAF loans could be used to purchase real property, property improvements, equipment and certain working capital requirements.
Borrowers also would need to work through their local lending institutions.
“They are required to work with a lead lender. All our programs are for gap financing. We don’t compete with banks,” Ulrickson said.
She said the feedback from potential borrowers was to keep access to the new fund simple, so the decision has been to maintain the same guidelines as the PACE and Flex Pace programs at the Bank of North Dakota.
“They have been doing this for a long time. They have been very, very successful with the program, so we didn’t want to add any additional hoops for borrowers,” she said.
PACE is a program for primary sector businesses and Flex PACE serves non-primary sector entities, including housing and child care. Because PACE can provide more financial assistance, SBPC would assist PACE applicants in seeking other funding sources when additional matching dollars are needed beyond the BAF limit of $70,000, Ulrickson said. Larger primary-sector applicants would be encouraged to work with MADC and make application to the MAGIC Fund, she said.
The BAF would provide a more confidential loan process than an application to the MAGIC Fund, but Ulrickson said a public awareness and approval piece still exists because PACE and Flex PACE participation require letters of support from local governments.
Consultant requested to help with city branding
The MAGIC Fund Screening Committee will consider a request Friday for up to $300,000 to hire a professional marketing consultant.
The consultant will conduct community market research, do strategic planning and implement a unified branding strategy, analyze outcomes and make recommendations for continued efforts.
The person would work under Visit Minot, in cooperation with Minot Area Chamber of Commerce and Minot Area Development Corp. Creation of the position would assist in moving forward with the findings of the International Economic Development Council report and subsequent local technical team white papers that recommended the development of one cohesive community brand with a supportive marketing plan.