Small Business Development Loan Program
The purpose of the Small Business Development Loan Program is to create jobs and provide loans for business expansions. Small business loans are made by the Minnesota Agricultural and Economic Development Board (MAEDB) through the issuance of industrial development bonds backed by a state-funded reserve of 25 percent.
Those eligible for loans through the Small Business Development Loan Program include manufacturing and industrial businesses located or intending to locate in Minnesota, as defined by Small Business Administration size and eligibility standards (generally, those with 500 employees or fewer). Loans up to a maximum of $5 million may be made for any one business. Generally, 20 percent of the project costs must be privately financed through equity or other sources. Interest rate is the market rate of interest for similar securities at the time bonds are sold; rates are fixed for the term of the loan. Real estate loans are for a maximum of 20 years; equipment is 10 years. Collateral requirements include the first mortgage on real property or equipment financed by MAEDB and personal guarantees of owners; in some cases, additional security in the form of other liens or guarantees may be required by MAEDB. There is no MAEDB fee, but bond issuance costs of 4 percent are capitalized with the loan principal; ten percent of bond issue must be escrowed. Funds are disbursed upon execution of the required loan documents and sale of the bonds.
Applications, using the Business and Community Development Application, are accepted on a year-round basis, but must be received by the first of each month to be considered at that month's MAEDB meeting.
For more information, contact Paul A. Moe at 651-297-1391 or toll-free at 800-657-3858. See also: Small Business Development Loan - Annual Program Summary, primarily for legislators.