Lake Agassiz Certified Development Company (LACDC) is a non-profit economic development organization approved by the Small Business Administration (SBA) to provide SBA 504 program loans, in conjunction with your bank, to eligible businesses throughout North Dakota.

• Be an operating business or an "eligible passive concern" (leases real or personal property to the operating company for use in the operating company's business).
• Be organized for profit.
• Be located within the U.S.
• Be "small" under the program size standards: Tangible net worth is less than $7.5 million and net profit is less than $2.5 million (2 year average).
• Demonstrate the need for desired financing (credit not available elsewhere).
• Meet an economic development objective of the program.

ECONOMIC DEVELOPMENT CRITERIA

• Jobs: Create or retain one full time equivalent job for every $50,000 of SBA guaranteed dollar in the project. Job creation within the first 2 years after project placement. Retained jobs are jobs that would be lost but for the project, AND/OR
• Community Impact: Improve local economy, bring new income into area, assist manufacturing firms, etc., AND/OR
• Public Policy Goals: National objectives such as rural development, expanding exports, expanding opportunities for veterans and women, revitalize a business district, etc.

TYPICAL FINANCING STRUCTURE

Bank 50%
CDC 40%
Equity 10%*

• *Equity: May increase to 15 percent or 20 percent if asset financed is "limited use" or the company is a startup or both. Equity can be in the form of cash or equity in real estate.
• CDC: Maximum is 40 percent of eligible costs, takes a lien subordinate to bank, can offer 10 or 20 year term depending on asset financed, provides a fixed interest rate and issues a debenture guaranteed 100 percent by SBA.
• Bank: May take priority lien on assets pledged as collateral, must offer a term of 10 years if debenture is 20 years (or 7 if debenture is 10 years), may set rate and fees that are legal and reasonable, loan cannot be guaranteed by SBA.

MAXIMUM LOAN AMOUNT

Eligibility entity may borrow up to 40 percent of the project for a total SBA guaranteed portion of:

• $1.5 million if the objective is job creation or community development.
• $2.0 million if the objective is a public policy goal other than manufacturing.
• $4.0 million if the economic development objective is manufacturing (NAICS code of 31, 32 & 33).

• Acquisition of land.
• Land improvements.
• Purchase one or more existing buildings (must occupy 51 percent; cannot make tenant improvements).
• Remodel, convert, expand or renovate existing buildings.
• Construction of a new building; need to occupy at least 60 percent with plans to occupy 80 percent within 10 years. Can lease up to 20 percent indefinitely.
• Acquisition of machinery and equipment with a 10 year or more useful life.
• Construction related costs such as a contingency reserve, professional fees and repayment of interim points, fees and interest.

• Working capital.
• Debt refinance (except for eligible interim financing).
• Franchise fees.
• Incorporation or other organizational costs.
• Commitment fees, origination fees, broker fees and counseling fees.
• Rolling stock (autos/trucks), boats and airplanes.
• Equipment/furnishings with less than a 10 year useful life.

• Low down payment which preserves working capital.
• Fixed interest rate second mortgage.
• Long term financing.
• Collateral usually limited to assets being financed.
• Rate of private sector financing usually more favorable (lower loan-to-value).
• Loan is assumable.

Darin Bullinger
Randy Kingsley
417 Main Avenue
Fargo, ND 58103
701-235-1197
www.lakeagassizcdc.com