Entrepreneurial Incentives

There are all kinds of sources of assistance in Greater Fargo Moorhead for people with good ideas. Start-ups qualify for many of the incentives for established businesses that assist with cost reduction, financing, workforce training and research and development. There also are also several specific to entrepreneurs. The GFMEDC staff is ready to assist you in determining program eligibility and to answer any questions you might have.

North Dakota Seed Capital Investment Credit

An individual, estate, trust, partnership, corporation or limited liability company is allowed an income tax credit for investing in a primary-sector business. The credit is equal to 45 percent of an investment with no more than $112,500 allowed in any taxable year. The unused credit may be carried forward up to four years. Only the first $500,000 of eligible investments in a certified business is eligible for the tax credit. The total amount of tax credits allowed for investments made in all certified businesses in any calendar year is limited to $3.5 million.

North Dakota Angel Fund Investment Credit

An individual, estate, trust or corporation is allowed an income tax credit for investing in an angel fund in North Dakota. The credit is equal to 45 percent of the investment, up to a maximum credit of $45,000 per year. An unused credit may be carried forward up to four tax years.

Minnesota Angel Tax Credit

Qualified investors, funds and businesses that invest in start-up high-technology businesses may be eligible for a credit against their individual or corporate income tax. The credit is equal to 25 percent of the investment in a qualified business, with a maximum credit of $125,000 per person per year. Minimum investments are $10,000 for an individual and $30,000 for a fund. Investors can claim no more than $1 million in credits per business.

A qualified business is one that engages in at least one of the following:

• Using proprietary technology to add value to a product, process or service in a qualified high-technology field.
• Researching or developing a proprietary product, process or service in a qualified high-technology field.
• Researching, developing or producing a new proprietary technology for use in agriculture, tourism, forestry, mining, manufacturing or transportation.

In addition, a qualified business must be headquartered in Minnesota and employ fewer than 25 people, with at least 51 percent of the workers and total payroll based in the state. The business must have been in operation for no more than 10 years and cannot have received previous equity investments exceeding $2 million.

Beginning Entrepreneur Loan Guarantee Program

The Beginning Entrepreneur Loan Guarantee Program provides a guarantee of 85 percent of the principal for a loan up to $100,000 to pay for start-up or expansion expenses. The program requires the participation of a lead lender.

The borrower must:

• Be a North Dakota resident who holds a high school diploma or equivalency.
• Have had some experience or education in that type of revenue producing activity.
• Have a net worth less than $200,000.

The interest rate may not exceed the Bank of North Dakota’s base rate plus 3 percent, for a term of up to five years. There is also a 0.5 percent per year fee or a one-time fee of 2 percent of the guaranteed portion.

West Central Initiative Foundation

Revolving Loan Funds

The West Central Initiative Foundation assists businesses and communities in west central Minnesota by providing gap financing to eligible new and expanding businesses. West Central Initiative’s loan programs typically supplement conventional bank financing, anywhere from 10 to 40 percent of the total financing for eligible applicants. Eligible projects must be able to prove that a financing gap exists and the bank is not able to fund the entire project.

The Industrial Loan Fund is West Central Initiative’s fund for larger loans of between $20,000 and $300,000. Loans from this fund are often offered at a rate below the market rate and are typically used to fund new construction of a building or the purchase of equipment or existing real estate, and in some cases may be used for working capital or other intangible uses. The loan must always be collateralized and will require a personal guarantee if the borrower is a corporation.

The Small Enterprise Loan Fund (SELF) is West Central Initiative’s fund for small loans of $1,000-$35,000. It is used to fund fixed assets and working capital for small local businesses, startups and some retail businesses.