The Lake Agassiz Certified Development Company's (LACDC) primary focus is the administration of the Small Business Administration (SBA) 504 Loan Program for the state of North Dakota.

The SBA 504 Loan Program allows small business owners to purchase an industrial or commercial building at below-market interest rates with a minimum down payment or equity injection.

SBA 504 loans can be used for:

• The purchase of an existing building
• The construction of a new building
• Renovation or remodeling of an existing building
• Equipment Purchases
• Land acquisition and land improvements

Generally, the SBA 504 Loan Program, along with your bank, can finance up to 90% of the overall project cost. This leaves only a 10% equity injection requirement from the business owner(s).

The typical structure of the overall loan package for a $1 million qualified project will look like the following:

The maximum loan amount eligible for the SBA 504 loan portion is

• $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

The advantages to an SBA 504 Loan Program borrower are:

• Low down payment, which preserves working capital
• Fixed below market interest rate
• Long term financing
• Collateral usually limited to assets being financed
• Loan is assumable

The interest rate on the SBA 504 Loan portion is based on a debenture rate, which is roughly comparable to Treasury rates. The term on an SBA 504 loan is offered at 10 or 20 years.

The SBA 504 Loan Program requires payment, from the applicant, of a fee of 2.25% of the SBA 504 portion of the overall loan package, a closing fee, and legal fees of approximately $1,000. All of these fees can be financed in the SBA 504 portion of the project.

The SBA 504 Loan Program strives to achieve an "Economic Development Objective." These Economic Development Objectives are briefly defined as:

• JOBS: Create or retain one full-time equivalent job for every $50,000 of SBA 504 loan proceeds (Manufacturing objective increases this amount to $100,000). Job creation within the first two years after project placement. Retained jobs are jobs that would be lost, but for the project.
  
  
• COMMUNITY IMPACT: Improve local economy, bring new income into area, or assist manufacturing firms.
  
  
• PUBLIC POLICY GOALS: National objectives such as rural development, expanding exports, expanding opportunities for veterans and women, or revitalizing a business district.