Last month, I wrote about Innovate ND and how the program is great for helping early-stage startups and entrepreneurs. What happens, though, when you finish with Innovate ND and still need some support? At the North Dakota Department of Commerce, we have other programs that can help businesses and startups continue to grow and build their business. One such program is the North Dakota Development Fund.
The Development Fund is a valuable financing tool for North Dakota businesses, providing a strong return-on-investment for taxpayers and contributing significantly to job creation. As we continue to grow our economy in the state and create economic opportunities for our citizens, it is important that financing support is available for startup or expansion projects in North Dakota.
The Development Fund was created through legislation in 1991 as an economic development tool. It provides flexible gap-financing through debt and equity investments for new or expanding North Dakota primary-sector businesses. It is important to note that the Development Fund has been self-sustaining since 2003, and with initial funding totaling $28 million, the fund has been able to grow and invest $112 million through the payback of the investment principal along with dividends and interest received.
The Development Fund makes investments of up to $1 million in primary-sector businesses as either a loan or equity investment. The North Dakota Development Fund Board may adjust the limit when deemed appropriate.
In general, the following criteria apply to Development Fund investments:
• The entrepreneur must have a realistic financial commitment at stake. Usually, principals are required to have a minimum of 15 percent equity in the project.
• Refinancing of debt is not eligible.
• Principal shareholders with 20 percent or greater ownership are generally required to guarantee the debt. Other shareholders may also be required to guarantee.
• The Development Fund will not participate in more than 50 percent of a project’s capitalization needs.
• Financing is available to any primary-sector business project, with the exception of production agriculture.
• “Primary sector” includes individuals and businesses which, through the employment of knowledge or labor, add value to a product, process or service, which results in the creation of new wealth. “Primary sector” includes tourism and specific types of investor-owned agriculture and is typically businesses such as manufacturers, food processors or export-service companies. “Investor-owned agriculture” includes livestock—feeding or milking operations—or other value-added agriculture located apart from an individual farm operation that is professionally managed and has employees.
“We try to make our program fit the financial needs of the business instead of the business fitting into the program,” says Dean Reese, CEO of the North Dakota Development Fund.
Ashley Hruby – Credit Technical Analyst, Dean Reese – CEO, Scot Long – VP and Sara Isaak – Accounting/Asst. Credit Analyst
Since the launch of the Development Fund, it has invested $112 million in 588 companies, with more than $38 million invested in rural communities. The investments made by the Development Fund have contributed to the projected creation of more than 10,000 primary-sector jobs. The North Dakota Development Fund has invested in 122 communities across the state.
The economic activity continues to be strong in North Dakota. In providing flexible financing, the Development Fund has and will continue to assist primary sector businesses start up or expand, which, in turn, will help to create additional jobs and new revenues for the state.
Some of the companies that have used the Development Fund include:
Pedigree Technologies – Fargo
Myriad Mobile – Fargo
Profit Pros – Fargo
Dakota Specialty Milling – Fargo
Ideal Aerosmith – Grand Forks
Buffalo City Wood Products – Jamestown
Gates Manufacturing – Lansford
La Rinascente Pasta – Hope
Earth Kind – Bismarck
For additional information, visit NDDevelopmentFund.com