Purpose
This program provides loans that create jobs and expand
businesses. The Minnesota Agricultural and Economic Development Board (MAEDB)
makes small business loans through the issuance of industrial development bonds
backed by a state-funded reserve of 25 percent.
Customers and Services
Eligible applicants are 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 or fewer employees). New capital investment must result in a
significant number of new jobs and other beneficial economic impacts. Eligible
costs include acquisition of land, building, machinery and equipment; building
construction and renovations; and development costs such as engineering, legal,
and financial fees. Working capital and refinancing are not eligible.
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 four 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. There is capacity for an additional $25,000,000 of loans through
issuance of bonds.
Measures - Reporting period is state fiscal year (SFY), July 1 - June
30
|
|
SFY 2003 |
SFY 2004 |
SFY 2005 |
| Number of projects |
3 |
1 |
4 |
| Loan amounts |
$540,000 |
$4,000,000 |
$565,000 |
| Number of jobs |
95 |
65 |
85 |
Funding Source and Allocation
MAEDB provides direct loans or loan
guarantees, or participates with private financial institutions on business
loans; loans can range from $50,000 to $500,000. The aggregate amount of all
direct or participation loans cannot exceed $3M.
Statutory Authority
-- Minnesota Statutes, Chapter
41A.036
Contact Information
Paul A. Moe, Director
Minnesota Department
of Employment and Economic Development
332 Minnesota Street, Suite E200
