Federal Financing and Incentives
Small Business Administration Loan Programs
- SBA 504 Loans provide small and medium-sized businesses with long-term, fixed-rate financing for long-term assets such as real estate and equipment.
- SBA may guarantee up to 40 percent of the total project cost, or from $50,000 to $5 Million (up to $5.5 Million in certain cases and for manufacturing).
- Borrower must inject at least 10 percent of the total funds for any project (up to 20 percent for startup and special purpose). The remaining 50 percent is usually provided by a financial institution.
- Terms include 10 years for loans to finance machinery and equipment, and 20 years for real estate loans. Interest rates vary.
- To be eligible, a business and its affiliates must have a net worth less than $7 Million, and an average net income after taxes of less than $2.5 Million per year for two years.
- SBA Microloan Program assists start-up, newly established, and all other small businesses obtain short-term, fixed rate financing.
- Eligible small businesses typically employ ten or fewer employees.
- Loan proceeds may be used for working capital, inventory, and equipment.
- Loan amounts vary from $1,000 to $35,000.
- Terms vary from one month to three years, depending on use of capital.
- Applicant is required to inject at least 10 percent of the necessary equity.
- SBA 7(A) Loans assist eligible borrowers for starting, acquiring and expanding a small business; SBA 7(A) is the most basic and most widely used within SBA's loan programs.
- Borrowers must apply through a participating lender.
- Loan funds can be used for short and long-term working capital, purchasing equipment, machinery, furniture, fixtures, supplies or materials, purchasing real estate, including land and buildings, constructing a new building or renovating an existing building, and refinancing existing business debt, under certain conditions.
USDA Rural Development
- Business & Industry (B&I) Loan Guarantee Program helps create jobs and stimulates economies by providing financial backing for rural businesses.
- Guarantees loans up to 80 percent of loss resulting from borrower default.
- A 10 percent equity injection is required for existing businesses; and 20 percent equity injection for start-ups.
- Assistance is available to virtually any legally organized entity located in a rural community with fewer than 50,000 residents.
- Loan funds can be used for machinery, equipment, buildings, real estate, working capital and certain types of debt financing.
- Interest rates are negotiable and loan terms vary according to the use of funds.
- The maximum aggregate B&I Guaranteed Loan amount that can be offered to any one borrower under this program is $25 Million.
- Rural Energy for America Program (REAP) provides financial assistance to help rural small businesses purchase renewable energy systems and make energy efficiency improvements. Financial assistance is in the form of grants and guaranteed loans.
- Grants can fund up to 25 percent of a project’s total eligible costs, and can range from $2,500 to $500,000 for renewable energy projects and from $1,500 to $250,000 for energy efficiency improvements.
- Guaranteed loans can fund up to 50 percent of a project’s total cost, ranging from $5,000 to a $25 Million maximum loan.
- Eligible renewable energy projects include those for which energy is derived from wind, solar, biomass or geothermal sources, or for which hydrogen is derived from biomass or water using one of the previously stated energy sources.
- Eligible energy efficiency projects include retrofitting lighting or insulation, or purchasing or replacing equipment with more efficient units.
- For all projects, the system must be located in a rural area, be technically feasible, meet environmental requirements, and be owned by the applicant.
- Rural Business Enterprise Grants (RBEG) Program makes grants available to public bodies, private nonprofit corporations, and Federally-recognized Indian Tribal groups to finance and facilitate development of small and emerging private business enterprises located in any municipality with a population of fewer than 50,000 inhabitants. The grantees then pass grants on to fund needed infrastructure, technical assistance and/or develop revolving loan funds to assist small and emerging business, defined as businesses with fewer than 50 employees and less than $1 million in gross annual revenues.
- Eligible uses include, but are not limited to, land acquisition and development, start-up operating costs and working capital. technical assistance for private businesses, and establishment of revolving loan funds.
- Preference is given to projects that are located in a community where the unemployment rates exceeds the state rate, that has a median household income that is less than the state’s total median household income, as determined by the 2000 census and includes a commitment of funds from non-federal sources and a firm commitment from a business to locate or expand in the community, thereby creating jobs.
- Rural Economic Development Loan (REDL) Program makes USDA Rural Development funds available as a zero-interest loan to a Rural Utility Service electric or telephone utility provider. The utility is required to re-lend loan proceeds to eligible third-party recipients for economic development and job creation in rural North Dakota.
- Loans can fund up to 80 percent of the total project costs to start or expand a business, including cost of buildings, machinery, land and working capital, or to fund a business incubator.
- Loans are between $10,000 and $740,000
- Maximum repayment period of ten years with the ability to defer payments for up to two years.
- Rural Economic Development Grant (REDG) Program makes USDA Rural Development funds available as a grant to a Rural Utility Service electric or telephone provider. The utility is required to create a Revolving Loan Fund to lend the grant proceeds to eligible third-party recipients for economic development and job creation in rural North Dakota.
- Loans can fund up to 80 percent of the total project costs for business incubators to assist in developing emerging companies, community development projects, community facilities and services, and educational and medical facilities.
- Loans are between $10,000 and $300,000
- Maximum repayment period of ten years (with the option to defer payments for up to two years.)
Economic Development Administration
- Economic Development Administration Guarantee Program provides guarantees up to 80 percent of the principal and interest on loans to businesses in designated areas of high unemployment or low income.
- Rural Economic and Community Development Loan Program guarantees loans for businesses in rural areas to create and maintain employment and improve the economic climate. This program is designed for loans in the $1 to $15 Million range.
- REA (Rural Electric Administration) Cushion of Credit offers a “cushion of credit” as a ten year, zero interest loan through the local cooperative. Proceeds can be used for equipment, real estate and working capital with loans up to $400,000.
- Economic Development Administration Grant provides grant funds to communities for infrastructure limited to 80 percent of the project cost.
Valley City - Barnes County Development Corporation
250 West Main Street
Valley City ND 58702
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