The Northeast South Dakota Economic Corporation (NESDEC) was established in 1978 to increase business and job development, which was suffering due to the out-migration caused by the demise of the family farm. NESDEC's mission is to stimulate economic opportunities through loans, technical support and partnerships. NESDEC administers five loan programs, providing opportunities for low- to moderate-income individuals to secure loans. NESDEC has provided over $28.2 million in financing, helping maintain or create 5,726 area jobs.
NESDEC administers five loan programs:
- CD Pledge: NESDEC can purchase a CD for up to 50 percent of a small business loan (maximum $20,000), which can be used as security for a bank loan. By collateralizing part of the repayment, NESDEC makes it more feasible for the bank to make the loan.
- Supplemental Loan Program: Provides direct assistance to low-equity applicants seeking to develop secondary sources of income. There is a $10,000 limit on these loans, with up to a three-year repayment schedule. The interest rate charged is based on the risk involved, the term of the loan, security, and additional factors.
- Direct Loan and Loan Participation Program: Provides loans with higher limits (maximum NESDEC participation is $150,000) and longer terms (up to 25 years). It also has provisions for providing below-market interest rates.
- Intermediary Relending Program: A direct-loan program funded through the Office of Rural Development. The maximum amount of a loan cannot exceed $250,000 or 75 percent of the total project cost.
- Equity Fund: Provides funds for investing in small- and medium-sized businesses. These investments may be in the form of subordinated debt or stock options.
NESDEC serves clients living in rural areas in 22 counties in South Dakota. Thirty-one percent of NESDEC's borrowers are women. A majority of borrowers are Caucasian, one percent are African American, two percent are Native American and two percent other minorities. Thirty percent have a household income at or below 80 percent of the area's median income. NESDEC focuses on the underserved, underprivileged and low-income populations. Most of NESDEC's borrowers have low equity. They are often considered "unbankable" without the assistance of NESDEC. They seek to better their economic conditions by starting, developing or expanding a business.
In the past 3 years, NESDEC has averaged 76 loans per year totaling over $3 million. Since its inception, NESDEC has made 1,201 loans to 784 businesses; its loan activity totaling over $28.2 million. NESDEC has assisted in creating or maintaining 5,726 area jobs as well as financing 45 small-scale, light manufacturing firms. NESDEC has a collection rate of 98 percent. NESDEC has financed an additional 80 housing loans totaling over $1.4 million.
When asked how NESDEC has helped, Ron Erickson, Airport Café Owner, responded, “NESDEC has really helped to secure my finances and get my business up and running.”
One of NESDEC’s goals is job creation and the Airport Café has done exactly this. Currently the Airport Café has nineteen employees all striving to excel in one thing that is important to everyone, customer service! This business is family owned with the freedom of making their own choices and pushing the business in what ever direction they need to travel to be successful. Full Story