Co-ops partner to secure funds for company’s expansion project « Back to Search Results
When Loren and Peggy Davis realized their business Diversified Bronze & Manufacturing, Inc. (DBM), was outgrowing its rented space in Cambridge, Minn., they sought a different location to begin construction on a larger building.
Working as L & P Properties LLC, the pair identified a space in the Braham Industrial Park as the perfect opportunity to build a new facility, then engaged a local bank and the electric cooperative to secure project financing.
East Central Energy (ECE), which serves the Braham Industrial Park, loaned $160,000 from its Revolving Loan Fund (RLF) to L & P Properties LLC for the 8,612-square-foot facility that broke ground for construction in June. When complete, the new building will include office, manufacturing, warehousing and distribution space.
The RLF funds originated mainly from the United States Department of Agriculture (USDA) Rural Economic Development Loan and Grant (REDLG) program, which provides loans and grants to rural electric and telephone cooperatives for specific economic development purposes. As loans are paid back, the RLFs are intended to grow and provide financing for further qualifying economic development projects over time.
ECE coordinated its RLF financing with Cambridge State Bank, which is financing approximately 70 percent of the project’s total cost of more than $700,000.
Great River Energy was able to help secure the financing by providing a technical review of the application and loan packaging for ECE.
“We evaluated the project and the applicants for eligibility against the USDA-approved East Central Energy Revolving Loan Fund plan, and also provided tools and data for the co-op to use in determining the appropriate loan amount and interest rate
s,” said Jeff Borling, economic development lead at Great River Energy. “The tools we provide d include cash flow analyses, debt coverage ratio projections, assessments of collateral value, amortization schedules and more.”
DBM is the third business to locate in the Braham Industrial Park, leaving seven additional lots available for future development. Borling notes the ECE RLF has a healthy loan fund balance and is accepting applications for loans of up to $250,000 at competitive interest rates. Any projects resulting in the expansion of a non-retail, non-farm business are eligible to receive this funding.
ECE and Great River Energy have pledged support for the City of Braham as they continue to make the industrial park more competitive for future development. Those interested in development opportunities in Braham or the surrounding region can contact Borling or Lana Black at ECE.
Pictured, from left, are Lana Black, East Central Energy business accounts specialist; Jeff Borling, Great River Energy economic development lead; and Peggy and Loren Davis, co-owners of L & P Properties LLC.