Loan fund outpaces expectations
Business Accelerator Fund goes into second round
Fourteen projects have benefitted in the past two years from a revolving loan fund started just over two years with money from Minot’s MAGIC Fund.
Briselda Hernandez, assistant director at Souris Basin Planning Council, which manages the Business Accelerator Fund (BAF), said the first round of $500,000 has been allocated from the fund, with three additional pending projects seeking $163,042.
SBPC received the second installment of $500,000 authorized previously from the MAGIC Fund by action of the Minot City Council this month. The BAF launched in June 2019. SBPC anticipates allocating about 80% of appropriated funds by the end of this year, based on active project proposals. As fund repayments begin coming in within the next two years — once the interest buydown periods end for individual borrowers — those dollars will be recirculated as new low-interest loans. Interest buydown is provided through the Bank of North Dakota.
Hernandez said the BAF has exceeded the original goals set for it. The fund so far has created 217 jobs, well beyond the 75-job goal. It has leveraged $16.1 million, which is more than double the $7.6 million goal.
“So just looking at those goals that we set, we’re happy with the outcomes,” Hernandez said. “We don’t expect that to change as we move forward. And again, because funds are revolving, we’ll continue to see that impact throughout the years.”
The approved 14 projects include 12 in Minot, one in Drake and one in Burlington. Five of the Minot projects are downtown.
Projects within SBPC’s seven-county region are eligible if they meet fund guidelines. The BAF can invest up to $107,693 in a project, up from $70,000 in the first round.
“We have multimillion dollar projects that can use that maximum benefit. That will allow them to redevelop under-utilized buildings. A lot of the buildings downtown are older. They’re costly to redevelop, and if we want to encourage that type of activity within our Main Street and in our downtowns and also our rural communities, that’s a great tool,” Hernandez said. “The majority of the projects approved for that first round of funding were projects that we consider infill projects — the reuse, the redevelopment of maybe under-utilized buildings or properties.”
So far, 11 projects have involved infill and two others that fit that description are pending.
Hernandez said the board overseeing the loan fund considers reuse and redevelopment of properties in distressed areas to be an important community benefit.
“So we are happy with those types of activities, to be able to support those community initiatives of promoting downtown, redeveloping Main Streets. We’re happy to be able to utilize the Business Accelerator Fund as another tool to promote those types of activities,” she said.
Projects have been non-primary sector businesses, such as retail. SBPC’s new office space in downtown Minot is located in a downtown building rehabilitated with help from the loan fund.
Projects typically are startups or expansions and are part of a larger funding package that owners put together with help from their local lenders. Hernandez said anyone thinking of applying should make contact with SBPC early in the process to help ensure all guidelines can be met along the way.
Preston Phillips, vice president of commercial lending at First International Bank & Trust, said the accelerator fund offers an uncomplicated loan process that enables borrowers to take advantage of the interest buydowns from the Bank of North Dakota’s Flex PACE program.
“These are state dollars that are grant money,” he said. “Other communities have been taking advantage of this program for a long time. It’s great to see that now in Minot.”
Phillips said without the BAF, some prospective borrowers might not be able to finance their projects, particularly if they are just starting out.
“When I have clients come to me, they are looking into new business ventures. It’s daunting. It can be stressful,” he said. “This program allows them to have a little more ease, knowing there’s going to be a subsidy on their monthly payments to help them cash flow at the beginning.”