Jill Schramm/MDN Downtown Minot, looking up Main Street, is getting assistance in its revitalization from a loan program started last year. The Business Accelerator Fund focuses on small business, both in Minot and regionally.

Several local businesses have made start-up or expansion plans with the help of a revolving loan fund that’s just completed its first year of operation.

The Business Accelerator Fund, managed by Souris Basin Planning Council and funded through Minot’s MAGIC Fund, has given a boost to businesses such as downtown Minot’s 701 Realty.

Andrew and McKenna Gudmunson had been looking to purchase property for 701 Realty after initially leasing space while getting established following the company’s startup in the spring of 2018.

“The lender recommended this program,” Andrew Gudmunson said of the Business Accelator Fund. “They thought it might be a good fit for us.”

The loan for the property purchase was completed in early 2020. Gudmunson said starting a business can be intimidating and costs can be higher than anticipated. BAF provided that extra piece of financing needed to cover additional costs and relieved a lot of the stress and pressure, he said.

The Gudmunsons now are finalizing plans for remodeling.

“We’re going to be going back for a renovation loan, and we’ll be hoping to use the program again since we had a good experience with it the first time,” Gudmundson said. “It was 100% easy. I think, being one of the first ones, there was a learning curve. It took a little longer than we anticipated, but it was just a couple months delay, which wasn’t an issue at all.”

Gudmunson said he recommends the program to real estate clients looking for financing.

“We always encourage them to talk to their lender to see if it would be an option for them because it has been a great program for us,” he said.

Since its inception in June 2019, BAF has been approved for seven low-interest loans – four in 2019 and three in 2020. Two loans remain to close, but in total, the seven loans amount to investment from the revolving loan fund of $212,642. However, that money has leveraged more than $7.6 million in other investments, including personal equity, private bank lending and Bank of North Dakota Flex-PACE.

“We believe that’s pretty great. So on average, for every dollar in BAF funding, we’ve leveraged about $35,” said Briselda Hernandez, business opportunities manager for Souris Basin Planning Council.

There have been 79 jobs created or retained, according to BAF records. Five of the seven projects funded by the loan fund are located in Minot and three of those are downtown.

“With the movement to revitalize downtown and bring more investment, we feel like this is a really good fit to leverage private funding to make that happen for downtown Minot and Minot as a whole,” Hernandez said.

“It’s nice to see that local developers are taking it upon themselves to gentrify and revitalize downtown. This program helps immensely,” said Tyler Neether, vice president of commercial lending at Town & Country Credit Union.

Financing a fledgling business typically requires a package of lending programs, and Neether said BAF’s ability to leverage additional money makes it an important piece of the puzzle.

“This is just one more tool in the toolbox we can use,” he said.

Loan recipients have been smaller, locally-owned businesses. In the rural areas where retail and service jobs are key, inquiries have come from a grocery and events venue.

BAF can invest up to $70,000 in a project. Interest rates have averaged between 2% and 3%, with interest buydown available through the Bank of North Dakota. Hernandez said no project is too small to apply. In one case, BAF invested just $2,000 but matched it with $14,000 in interest buydown savings.

“For the small business owners, they’re looking for as many savings as possible in order to ensure that their businesses can be financially healthy, especially at the startup phase,” Hernandez said. “It leaves more room for you to cash flow, to make additional investments that maybe you weren’t originally planning to make into your business.”

In the midst of the COVID-19 pandemic, some businesses are taking advantage of federal assistance programs or, in some cases, putting plans on hold. Still, BAF remains important, Hernandez said.

“We have a couple of projects in the works right now, primarily in developing property. That would be a big benefit for those developers to get that interest buydown. So we’re still seeing investment. We’re still seeing some companies looking into expanding,” she said.

Applicants can apply to the program through their local lenders or by contacting Souris Basin Planning Council.

The $212,642 invested so far is well below the $1 million allocated to the revolving loan fund from the MAGIC Fund. Hernandez said the expectation is that most of the money eventually will be reserved as more applicants come into the program.

“We’re looking forward to working on more projects and bringing in more businesses into the community and helping the current businesses expand,” she said. “I would encourage anyone looking into starting or expanding to either talk to the lenders, or talk to us, and learn a little bit more about BAF and if that would be a good fit for your business.”