The program, referred to as the Accelerate Loan Program, is based on the state’s Innovation Technology Loan Fund, which acts as a way to provide capital to companies that diversify the state’s economy beyond oil and agriculture. Loans potentially granted through the Accelerate program come with a higher level of risk than loans generated through other economic development programs run by the city or Jobs Development Authority.
Loans generated through the Accelerate program do not come with the requirement of a personal guarantee on the part of the applicant. Growth Fund committee member and local businessman Jonathan Holth said he has never engaged in business without a guarantee. Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation, who worked to devise the program alongside city staff, said start-ups are not in the position to offer a guarantee. He added that should the program require one, it could cause new businesses to relocate to another region to seek capital.
“We’re trying to be aggressive with this program,” said Lund. “We’re trying to take a bet on the entrepreneurs and deliver the message that we’re supporting you and the creation of your business, and the expansion and growth of your business here, taking position as a creditor.”
At present, the proposed program requires a lien against the assets of a start-up company. Terms of the loan include a maximum amount of $250,000 for five years, with no interest or payments for three years. The remaining two years will carry a 2% interest rate, with a balloon payment at the end of the term, closely mirroring the state’s LIFT program.
During a meeting Monday, Growth Fund members spoke back and forth on how much of the JDA’s portfolio should be committed to the program, but seemed to reach consensus that $1 million would suffice, during the initial stage of the program. Should the committee receive more than four applications, the program would be re-evaluated, and additional funding could be allocated. The Accelerate program will be discussed again at a Jobs Development Authority meeting next month, though committee members – funding details and personal guarantees aside – seemed supportive.
“I agree this is something that is needed and I think will address a lot of concerns around capitalization for startups,” said Amy Whitney, Growth Fund Committee member and director of UND’s Center for Innovation.
In other Growth Fund news, committee members:
Approved a loan in the amount of $148,000 to ORDA, Grand Forks-based manufacturer of components for street sweepers. The company has experienced growth and needs to build a new building in the industrial park. The loan will be used to buy down interest on another loan from First State Bank. The project is expected to cost $1.45 million. Committee Chair Bret Weber said Grand Forks is fortunate to have the company doing business in the region, and Mirek Byczynski, principal of the company, responded in kind.
“We’re also fortunate because this is such a great place to work, a very good environment,” Byczynski said. “I’m really happy.”
Granted a $200,000 C-RUN loan to manufacturer Paragon Pros, to acquire steel, the supply of which has tightened during the pandemic. C-RUN is the city’s revolving loan program for responding to business challenges to the pandemic. Paragon Pros is a metal goods manufacturer. The loan will allow the company to keep enough steel on hand until the supply chain loosens up and prices fall
Granted another C-RUN loan for $150,000 to HB Sound and Light Inc., to purchase a mobile stage for outdoor events, and speakers and amplifiers for that stage. The company has been impacted by the pandemic, as most live events were canceled, and has been focusing recently on the installation of audio, video, security and streaming equipment. C-RUN loans come with a 1% interest rate, with payments deferred for 12 years. Loan terms vary depending on the amount borrowed.