Opportunity Fund available to local businesses
The city of Mandan led 38 municipalities across North Dakota to qualify for the North Dakota Opportunity Fund.
The fund of about $9.7 million from the U.S. Department of the Treasury was established for entrepreneurs interested in starting or expanding their small business.
Since November 2012, the fund has loaned out $6.2 million and helped 23 businesses in 38 North Dakota communities. It’s made loans ranging from $8,000 to $1 million, and one loan has already been paid off.
“The Opportunity Fund, under the State Small Business Credit Initiative, was created by the Small Business Jobs Act of 2010 to help small businesses and manufacturers attain the loans and investments needed to expand and create jobs,” said Matt Burthold, loan officer for the Lewis and Clark Regional Development Council, which provides the lending services for the Opportunity Loan.
The loan offers less restrictive access to capital than banks and can help ease the cost of start-up. The fund can be used for things such as start-up costs, working capital, franchise fees, equipment, inventory, and the purchase, construction or renovation of a building. When one loan is paid back the money is lent again.
This opportunity can make a difference with entrepreneurs on whether to take the plunge or not. Nonetheless, Mandan already has two $1 million revolving loan funds created with U.S. Department of Agriculture Rural Development money, The two funds have helped start or expand a total of 30 different businesses.
However, Burthold, said there has only been one business in Morton County that has taken advantage of the N.D. Opportunity Fund loans.
Brent Ekstrom, LCRDC Director of Commercial Lending explains on the City of Mandan website that, “The new loan program complements traditional commercial lending services and helps businesses by reducing owner equity requirements. Where banks may require 20 or 30 percent cash upfront for beginning businesses, this program requires a minimum 10 percent down and fills the gap between what a bank will lend and what the entrepreneur has available.”
* The Opportunity Fund cannot loan more than $1 million to any business nor can it provide financing for more than 50 percent of the proposed project costs.
* The program targets an average borrower with fewer than 500 employees.
* The program must ultimately leverage the federal dollars to generate at least $10 in new small business investment for every $1 of support through the fund.
* The loan program offers interest rates ranging from four percent to market rate. Projects that have the highest development impact or provide assistance to underserved persons, or businesses impacted by natural disaster, are eligible for the most attractive rates.
To be eligible, businesses must show the ability to service the debt and conduct business, show a commitment to the project, provide satisfactory payment history with other lenders/creditors, have a satisfactory credit history and offer acceptable collateral.
For more information visit cityofmandan.com and type in N.D. Opportunity Fund in the “Search bar.”