Governor Walz Secures $97 Million for Small Business Support in MinnesotaOct 24, 2022 12:26PM ● By Content Editor
From MN Department of Employment and Economic Development - October 24, 2022
Today, Governor Tim Walz and the Minnesota Department of Employment and Economic Development (DEED) Commissioner Steve Grove announced they secured nearly $100 million in new funding to support small businesses through the State Small Business Credit Initiative (SSBCI).
The federal government has approved Minnesota for up to $97 million in small business financing support, which allows DEED to carry out its commitment to helping small businesses grow and succeed. Minnesota will receive funds in three disbursements over several years; the initial disbursement from the U.S. Treasury is approximately $29.5 million.
"Small businesses are at the heart of communities across the state and drive our economic growth," said Governor Walz. "These new federal funding streams are critical to bolstering small businesses and helping Minnesota's economy grow and thrive."
"Three out of every four Minnesotans work in small businesses," said Department of Employment and Economic Development (DEED) Commissioner Steve Grove. "This new funding will have a significant impact for business owners around the state who need it most – especially entrepreneurs of color, women and veterans. They are building the future of our economy."
Based on research and dozens of listening sessions with stakeholders over the last year, DEED is committed to addressing significant market gaps in financing with this funding. Before the end of 2022, the agency will launch six Treasury-approved programs under the new initiative to benefit small businesses. In most cases, businesses will access funding through approved lenders or other external financial institutions.
The first launch: Minnesota Loan Guarantee program
Today, DEED launches the first program in this series: the Minnesota Loan Guarantee Program. The program will provide guarantees to enrolled lenders for up to 80% of principal on loans to eligible businesses. This will help mitigate risk so lenders can increase capital available to small businesses across Minnesota.
Once lenders are enrolled, they will be able to make loans to Minnesota-headquartered small businesses using the loan proceeds for an eligible business purpose in Minnesota. Eligible business purposes include start-up costs, working capital, equipment, inventory, the purchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes, and the purchase any tangible or intangible assets except goodwill.
Lenders interested in participating in the Minnesota Loan Guarantee Program are invited to participate in a webinar with DEED officials on October 26. By early 2023, small businesses will be able to apply to the approved lenders.
More programs coming throughout the Fall
The other small business funding streams launching in the weeks and months ahead include: loans to early stage technologically innovative businesses, automation loans and purchase loan participations. In addition, a partnership with the University of Minnesota will provide opportunities for direct investment venture capital and venture capital fund investments.
"The University of Minnesota is pleased to offer its assistance and expertise to ensure the state and Minnesota's innovative small businesses can take full advantage of this federal investment in early-stage, venture-backed businesses," said Myron Frans, senior vice president for finance and operations at the University. "We are ready to put our broad and deep expertise in investing and sparking new business to add to these programs' successes."
Federal officials require DEED to provide one-quarter of all SSBCI funding to businessowners who are rural or Black, Indigenous and People of Color. DEED is aiming even higher and has set the goal that 50% of all funding go to these businessowners.
Under the SSBCI programs, DEED will have specific targets for small businesses with fewer than 10 employees, or those owned by people from communities of color and Indigenous communities, women and veterans, as well as those located in Community Development Financial Institutions (CDFI) investment areas.
Bringing it all together: a new online Small Business Center
To help small businesses and startups navigate these new programs and understand the breadth of DEED's existing resources for small businesses, the agency is also launching a new online Small Business Station today.
The Station is designed to help entrepreneurs navigate agency resources to start and grow their businesses. It provides resources and expertise for small business owners looking to launch in Minnesota, along with a comprehensive list of DEED program offerings to help entrepreneurs thrive in Minnesota.
It can be found at joinusmn.com/smallbusiness.
The online center, a beta version of a larger project, will provide more details about SSBCI programs as they roll out throughout the fall. Minnesotans will also be able to access other DEED small business programming to provide training for entrepreneurs, connect them to funding opportunities and mentor and assist small business owners.
The creation of one-stop-shop resources was one of the recommendations of the Governor's Council on Economic Expansion, which advocated for increased focus from the agency to help small business growths. That recommendation will remain a key priority of the Walz-Flanagan administration across the enterprise.
About the State Small Business Credit Initiative
SSBCI was part of the American Rescue Plan Act (ARPA) of 2021 and included $10 billion for state, territory and tribal business finance programs. This is the second SSBCI initiative – Minnesota received $15 million through the Small Business Jobs Act of 2010.