EDA considers business loan
for nanotech-based company
Wednesday, February 27, 2008 4:34 AM
Members of the Spring Valley EDA, during a special meeting on Wednesday, Feb. 20, heard from Dan Fox of Rushford Hypersonic, which is what his business is currently named, about his request for a business loan from the board and to potentially locate his business in Spring Valley.
Fox's company is based on a nanotech patent he has the licensure to from the University of Minnesota. He currently doesn't have a manufacturing facility or warehouse and he is seeking capital to start up the business.
Fox stated that the first application of the technology will be in tooling, mainly drill bits and masonry bits. The nanotechnology creates a specially formulated coating that helps to reduce friction and wear and once the bits are coated with the product it makes them more durable and long-lasting. He also noted that a couple of military applications and a medical application are currently being worked toward with this technology. Fox said he didn't create the nanotechnology, but he was the guy who "figured out what to do with it."
Fox is requesting a $500,000 low-interest loan from the EDA. Mike Bubany, of David Drowns and Associates, had stated that the EDA could offer a loan of $150,000 and possibly another $150,000 could be obtained through SEMDC, according to current EDA director Brian Hoff.
Bubany favored offering the business a building, rather than a loan, to offer more protection to the city if there was a default. City Administrator Deb Zimmer and EDA member Mark Biermann noted that since their first meeting with Fox on Friday, Feb. 15, they had been looking for buildings in the city that would suit Fox's needs, which is 2,000 to 3,000 sq. ft. with a loading dock or industrial door.
Biermann noted that he didn't find a building in town that would work. Zimmer noted that there may be a building possibility in town but it needs major renovations. The idea was brought up that if a building could not be found, the city could build one and lease it back to Fox.
Fox said it will take two to three years to get his operation running strong and in about four to five years he would hope to grow to 60 to 70 employees. Then, at this time, according to Fox, he could move to the industrial park and build or expand if there was space available adjacent to his location.
Fox noted that all he is looking for is a letter of intent from the Spring Valley EDA that either "yes we want to work with you and move forward or no we can't help you and then I will move on down the road."
He also stated that he has been trying to obtain a start-up loan from the Rushford EDA. He said he felt he couldn't wait any longer for that group to make a decision so he decided to go somewhere else, and that he would like to stay in this area of Minnesota because there is a good work force with good work ethics to choose from.
Hoff assured board members that the Rushford EDA is aware of the situation and communication is open. Rushford was expected to review his proposal again on Monday of this week.
Hoff said that he has been checking references. Zimmer stated that the board needs more information on both sides and needs to check some things out.
Hoff said Bubany noted it is "a lot of apples in one barrel" because it is an unproven business based on a new technology.
Board member Kim Brown stated, "As far as I can go is express a definite interest and to move forward until we exhaust possibilities." The board approved a motion to move ahead with the project, exploring the possibilities and to have Bubany draft a letter of intent.
The board will discuss this loan request and building possibilities at the EDA's special meeting on Wednesday, Feb. 27, at 9 a.m.