Financial Assistance Programs for Businesses

One of the most important decisions you will need to make when considering starting a business is how to finance it. It is critical that you have a very good understanding of the start-up funds you need as well as six months of working capital to make sure you have cash on hand to perform day-to-day operations. There are many ways to finance a business, it is very important that you seek help to explore all your options. You might decide to self-finance, take out a small business loan, or depending on you concept seek angel or venture capital funds. Take a look at the funding options below and see if they work for you.

GOVERNMENTAL FINANCING & INCENTIVE PROGRAMS

Minnesota Job Creation Fund
The Job Creation Fund (this replaces the JOBZ program) provides financial incentives to new and expanding businesses that meet certain job creation and capital investment targets.  Companies deemed eligible to participate may receive up to $1 million for creating or retaining high-paying jobs and for constructing or renovating facilities or making other property improvements. In some cases, companies may receive awards of up to $2 million.  This award-winning program has been recognized for its innovation by the Economic Development Association of Minnesota.

Tax Increment Financing:
Tax increment financing (TIF) may be used to help finance costs of real estate development. TIF uses the increased property taxes that a new real estate development generates to finance up-front costs of the development. In Minnesota, TIF is used as an incentive to encourage developers to construct buildings or other private improvements, pay for public improvements, such as streets, sidewalks, sewer and water, and similar public infrastructure improvements that are related to the development. For more information, please contact your City Administrator.

City of Fairmont Revolving Loan Fund:
The Fairmont Economic Development Authority (FEDA) offers reduced interest rate loans on a matching basis for business expansion projects. The loans are normally subordinated and the criteria are adaptable but are normally 25% of the project cost up to $75,000. Other requirements include assistance cannot exceed $10,000 for each full time equivalent (FTE) created or retained. The interest rate and term are negotiable within a general range. For more information, please contact Michael Humpal, Assistant City Administrator 507-238-9461 or visit www.fairmont.org.

City of Trimont Revolving Loan Program:
Please contact the Trimont City Clerk at 507-639-2060 for details.

City of Sherburn Revolving Loan Fund:
The Revolving Loan Fund was established by the Sherburn Economic Development Authority (EDA) to assist businesses and residents with completing exterior and interior improvements to their buildings, including building additions. This public fund provides a source of financing at a low interest rate that can be used in conjunction with other private lender financing and/ or owner(s) contributions. The loan program can be used to pay 80-percent of the project cost up to $10,000. For more information, please contact Sherburn Economic Development Authority.

ENTERPRISE INVESTORS

Equity Investors:
The Fairmont area has a large number of successful individuals and/or companies that regularly consider equity investment opportunities. The diversity and variation in the types of firms within the community makes it possible to evaluate any size of equity investment opportunity that may be proposed. For more information, please contact Michael Humpal, Assistant City Administrator 507-238-9461 or visit www.fairmont.org.

LOAN PROGRAMS

Southern Minnesota Initiative Foundation (SMIF) programs: 

Business Loan Fund (SMIF)
Our business loans target six key industries: bioscience, renewable energy, food/agriculture, manufacturing, technology, and healthcare. Our Business Loan Program works in partnership with local lending institutions, economic development organizations, and government agencies to help “fill the gap” between available and necessary financial resources. Contact Diane Lewis at 507-455-3215 for more information.

Small Enterprise Loan Fund (SMIF)
Small businesses are the anchor of our economy. For the past 10 years, SMIF has provided micro loans through a partnership with the Small Business Administration (SBA). These loans support small business owners or start-up entrepreneurs who create service, retail, local foods, and manufacturing businesses.  Even though these businesses are very small individually, they create the fabric necessary for community vitality. All Small Enterprise Loan recipients are eligible to receive free technical assistance. Contact Marcia Haley at 507-455-3215 for more information.

Building Blocks Loan Fund (SMIF)
Our Building Blocks Loans support the business of family child care by providing financial resources and technical assistance to help expand or enhance licensed child care businesses. Loan dollars can go towards provider licensure; repairs, renovations, or upgrades to the child care space; educational materials; playground equipment; and curriculum. All Building Blocks Loan recipients are eligible for free technical assistance. Contact Marcia Haley at 507-455-3215 for more information.

Local Foods Loan Fund (SMIF)
Our Local Foods Loans support the start-up or expansion of businesses engaged in locally or regionally produced agricultural food products. Loan dollars can be used to purchase inventory, supplies, machinery/equipment, or used for working capital. Local foods producers will have the opportunity to receive mentoring and assistance through the FEAST Local Foods Finance Advisory Network, in addition to SMIF’s technical assistance. Contact Marcia Haley at 507-455-3215 for more information.

 

Small Business Development Loan Program: 
The Small Business Development Loan Program is designed to help small manufacturing and industrial businesses located or intending to locate in Minnesota. The purpose is to create jobs and provide loans for business expansions. This program in offered via the Department of Employment and Economic Development. For more information, please visit www.positivelyminnesota.com.

CDC/504 Program:
Certified Development Company (CDC), a 504 Loan Program is a long-term financing tool that provides growing businesses with long-term, fixed rate financing for major fixed assets such as land and buildings. The 504 Loan Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. The CDC/504 Program is administered by the Small Business Administration (SBA). For more information, please visit www.sba.gov and www.504corporation.com.

Business and Industry Loan (B&I):

The Business and Industry Loan program is administered by the USDA. The program is designed to help create jobs and stimulate rural economies by providing financial backing for rural businesses. Businesses located in towns or cities with a population less than 50,000 may use this program for acquisition, start-up, and expansion of businesses that create rural employment. For more information, please visit www.rurdev.usda.gov.

Six County Revolving Loan Fund: 

The Six County Revolving Loan Fund is administered by Region 9 Development Commission. Eligible businesses will be engaged in manufacturing, service, retail, distribution, or value-added agriculture. The fund can be used for real estate, machinery and equipment, and working capital. The business must be located in one of the participating counties with priority given to businesses that employ full-time skilled or semi-skilled workers. For more information, please visit www.rndc.org.

Nine County Revolving Loan Fund:

The Nine County Revolving Loan Fund is administered by Region 9 Development Commission. The fund can be used for real estate, machinery and equipment, and working capital. The business must be located in one of the participating counties with priority given to businesses that employ full-time skilled or semi-skilled workers. For more information, please visit www.rndc.org.

Micro Enterprise Loan Program: 

The Micro Enterprise Loan Program is administered by Region 9 Development Commission. The program is meant to provide capital for start-up and expansion for the small business activity not served by traditional lenders. The funds may be used for all costs demonstrated as essential for the project, including working capital, inventory, machinery/equipment, and building/leasehold improvements. For more information, please visit www.rndc.org.

Rural Economic Development Loans and Grants (REDLG): 

The REDLG Program is administered by the USDA and can be used for projects that create jobs in rural areas, or that provide infrastructure or community facilities in rural areas that will lead to economic stability. This program uses Rural Utilities Service Borrowers as a third party to promote rural economic and job creation projects. For more information, please visit www.rurdev.usda.gov.

Minnesota Community Capital Fund (MCCF): 

MCCF has a $50,000 minimum and a $2,500,000 maximum with fixed and adjustable rate loans available. Funds may be used for fixed assets, new building construction, building remodelling/renovations, leasehold improvement, business acquisitions, machinery/equipment purchases, moving expenses, and working capital. For more information, please visit www.mncommunitycapitalfund.org.

Growth Acceleration Program:

The Growth Acceleration Program is administered by Enterprise Minnesota, and is a program that assists manufacturing businesses to accelerate business improvements that result in the creation and retention of jobs, increased sales, reduced costs, and business investments. This program is a matching funds program of up to $50,000 per year per business. For more information, please visit www.enterpriseminnesota.org. 

GRANTS

Grants are a great source of capital to finance primarily non-profits or new initiatives. However, it is often a challenge to identify relevant grant opportunities to submit a proposal. Depending on your available capital reserves, you might want to consider hiring a grant writer to assist you with the process.

Federal Grants

www.grants.gov

Minnesota Office of Grants

www.grants.state.mn.us

Foundation Directory Online

www.foundationcenter.org

Minnesota Council on Foundations

www.mcf.org

Minnesota Council of Non-profits

www.mncn.org

VETERAN PROGRAMS

SBA Patriot Express Loan Program

The Patriot Express Loan Program is for veterans or members of the military community wanting to start or expand a business. The funds can be used for start-up costs, intentory, equipment, working capital, and much more. Patriot Express loans are generally the SBA’s lowest interst loans at about 2.25%-4.75% over prime depending on the size and maturity of the loan. Click here for more details.

Minnesota Reservist & Veteran Business Loan Program

The Minnesota Reservist & Veteran Business Loans are one-time $5,000-$20,000. Loan terms are 4.5 years, with no repayment for the first 1.5 years and equal monthly payments over the remaining 3 years. The loans are interest-free. Click here for more details.

*The financing programs outlined on this page make up only a small portion of what is available to business owners. Please contact us if you are seeking assistance finding financing that suits your needs.