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When jobs fall short, job-creation loan recipients pay penalty

April 9, 2014View for printing

The state Board of Economic Development adopted a new policy today for businesses that receive low-interest state loans for projects but don't fulfill their job-creation agreements.

The board will require that a business pay back the remainder of its loan at prime interest rate plus 2 percent. The previous policy used the commercial loan rate of the board's loan servicing agent, BankWest of Pierre.

Banks vary in their commercial loan rates. The new policy standardizes the board's approach, said Travis Dovre, a member of the Governor's Office of Economic Development staff. He said the current calculation of prime rate plus 2 percent would be 5.25 percent. He said the board could alter the 2 percent in the future if the prime rate drops or increases by any significant degree.

Bob Mercer American News correspondent

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