| Local Financial Assistance |
Local Banks |
Tax Increment Financing |
Municipal Bond Information Guide |
| Regional Financial Assistance |
SOUTHWEST MINNESOTA FOUNDATION (SWMF) |
Agricultural Utilization Research Institute (AURI) |
PRAIRIELAND DEVELOPMENT CORPORATION |
| Government Financial Assistance |
Minnesota Investment Fund |
SBA Programs |
TAX INCREMENT FINANCING
Tax Increment Financing (Tax Increment Financing Statute) is provided for by Minnesota statutes providing a basis for local units of government through their Housing and Redevelopment Authorities and Port Authorities to divert a portion of a project's tax base to bonds and/or pay as you go to help finance the feasibility of new economic development. The City of Marshall has been an active participant within TIF.
Tax Increment Financing can be used for the following purposes:
- Land and building acquisition.
- Demolition and clearance.
- Relocation costs.
- Public improvements (sewer, water, utilities).
- Soil corrections.
- Site preparation.
- Legal/engineering/administrative.
- Bonding and capitalized interest.
- Project contingency.
Incremental tax revenues generated from a new project are used by a city for repayment of the sale of a revenue or municipal general obligation bond issued on behalf of the project. The fundamental principle which makes Tax Increment Financing viable, is that it is designed to encourage development which would not otherwise occur. Dedication of the projected property tax revenues does not reduce property tax revenue for the city, county, or school district as this revenue would not be available unless the development occurs.
The City of Marshall, in anticipation of federal statutory changes, established a number of Tax Increment Financing districts and has sold approximately $4 million in bonds to service those districts.
If you would like a preliminary estimate of TIF benefits for a project, determine the site (by legal description) as well as the estimated market value of the additional construction (you will need to talk to your city assessor - in Marshall call the city assessor at507-537-6771) and email this information to John Meyer.
SOUTHWEST MINNESOTA FOUNDATION
The Southwest Minnesota Foundation (SWMF) is a philanthropic corporation serving eighteen counties in southwestern Minnesota, including Lyon County. Funds are distributed throughout the region in the form of grants and loans for human services, economic and business development, education, leadership development and health and human services.
The SWMIF will consider financial support of start up or expanding businesses that will create employment by generating new wealth and diversifying the ecomony of Southwestern Minnesota.
The Business Finance Program provides "gap financing" to eligible businesses. This financing supplements the dollars provided by financial institutions and investors and strengthens financial packages. The Initiative Fund also coordinates the State of Minnesota's Challenge Grant Program, providing loans to businesses and promoting economic development in rural Minnesota. The SWMIF has received over $1,000,000 in Challenge Grant monies from the State of Minnesota.
The Initiative Fund is officed out of Granite Falls and has an economic development loan program which provides up to $100,000 over negotiated time period and interest rates. Loans in many cases can be amortized over a period of time with a balloon payment.
Use of the program is designed to encourage job creation in southwestern Minnesota. The project must meet certain minimum and not exceed certain maximum size standards. The application process is two-part, which requires both a preliminary, concept approval and a final credit approval before the Southwest Minnesota Initiative Fund Board. The application process requires approximately 60-90 days to complete (back to Table of Contents).
SMALL BUSINESS DEVELOPMENT CENTER
The Southwest Regional Minnesota Small Business Development Center is location in Marshall with offices at Southwest State University. The SBDC provides area businesses with training seminars, free business publications and access to a small business reference library.
The Small Business Development Center has specialists who will assists with loan packaging, including cash flow projections, business plan development, financial statement comparisons and sources and uses of funds statements.
Staff will also serve as a liaison between businesses and other small business assistance resources in Minnesota. Some of these connections include the Minnesota Department of Trade and Economic Development Office, Minnesota Project Outreach and Minnesota Project Innovation (back to Table of Contents).
Agricultural Utilization Research Institute (AURI)
The Agricultural Utilization Research Institute (AURI) is a non-profit corporation created to strengthen rural Minnesota's economy by helping businesses respond to market opportunities. The institute builds working partnerships with business innovators, agricultural groups and researchers to develop new and value added uses for agricultural goods. AURI provides technical expertise to clients and financial assistance for new product research and development.
Eligible projects will foster long-term economic benefits in rural Minnesota by focusing on commercialization by development new products and processes using Minnesota crops to satisfy market opportunities, new or altnerative crop utilization, or processing technologies for Minnesota livestock products. AURI may provide up to 50% of the total project costs, with maximum financing of $100,000, subject to repayment under a contractual agreement (back to Table of Contents).
PRAIRIELAND DEVELOPMENT CORPORATION
The Prairieland Economic Development Corporation is a private non-profit corporation founded in 1983. PEDC works with the fifteen counties that comprise Region 8 & Region 6W (Big Stone, Chippewa, Lac Qui Parle, Swift, Yellow Medicine, Lincoln, Lyon, Redwood, Pipestone, Murray, Cottonwood, Rock, Nobles and Jackson). PEDC seeks to assist businesses in order to stimulate the growth and expansion of small business and industry, promote the improvement of community services, expand business ownership opportunities, increase employment opportunities and local tax base, and promote the development of general and community welfare.
- Prairieland Economic Development Corporation established a $2,000,000 loan fund for business development in the counties served by the Southwest Regional Development Commission in August, 1994. As of May 3, 1995, $1,019,000 in loans to small businesses had been approved by the PEDC Board of Directors. PEDC's $2,000,000 program is funded under Farmers Home Administration's Intermediary Relending Program. The funds are oats to PEDC which, in turn, makes loans to eligible small businesses.
Prairieland's IRP is designed to provide job opportunities for rural families, displaced farm families, and low or moderate income persons. Borrowers agree that at least 30% of the jobs, created or retained will be available to individuals from such families.
Eligible IRP uses include business acquisition, construction, conversion, enlargement, repair, modernization, development costs, purchase and development of land, building, facilities leases or materials, equipment, leasehold improvements, machinery, supplies, pollution control and abatement, transportation services, startup costs and operating capital, interest during startup period, feasibility studies, certain reasonable fees and charges, and aqua culture.
IRP loans may not be used to costs in excess of what is needed to accomplish project purpose, refinancing existing debt, charitable, educational or religious institutions, line of credit, agricultural production, community antenna television services or facilities, businesses where more than 10% of gross income is derived from legalized gambling, hotels, motels, tourist homes, convention centers, any tourist, recreation or amusement center.
The IRP is intended to be used as "gap" financing. Applicants must show that other sources of financing were sought and that the project can't be financed, either in whole or in part, with traditional lending sources.
Loan terms: The IRP loan can't exceed 50% of eligible project costs and the maximum loan of $150,000. The maximum term is fifteen years and interest rate is 7.5%. A 1.5% origination fee is due with the application and the applicant must pay up to $500 to cover attorney fees for the loan closing.
The project costs must be documented through appraisals or other recognized, standard techniques for the type of asset being financed. Adequate collateral is required. Life insurance on key persons and personal guaranties by principals are required.
- Prairieland also administers the SBA 504 Loan Program to assist communities to create jobs and expand the local tax base by stimulating small business investment in plant and equipment. This program traditionally lends to healthy, existing, expanding businesses manufacturing, retail or service. This program seldom does startup companies, however, it can if the debt-to-equity ratio is within SBA standards. (back to Table of Contents)
Program purpose:
To create new and retain the highest quality jobs possible on astate wide basis with a focus on manufacturing, technology and professional service jobs; to increase the local and state tax baseand improve the economic vitality for all Minnesota citizens.
How it works:
Grants are awarded to local units of government, who then make loans to assist new or expanding businesses.
Eligible applicants:
Cities, counties, townships and recognized Indian tribal governments.
Minimum requirements:
All projects must meet a minimum score based on private investment and the number of quality jobs created or retained.
Eligible projects:
Loans for land, buildings, equipment and training are eligible. Funds may also be used for infrastructure improvements necessary to support businesses located or intending to locate in Minnesota.
Ineligible projects:
Requests for working capital loans, retail development or the development of new industrial parks will not receive priority consideration.
Maximum available:
$500,000. Only one grant per state fiscal year can be awarded to a <R>government unit.
Other funds required:
At least 50% of total project costs must be privately financed through owner equity and other lending sources. Most applications selected for funding have at least 70% private financing.
Interest rate:
Negotiated.
Terms:
Real estate at maximum of 20 years, machinery and equipment at 10 years.
Collateral requirements:
Negotiated. Personal guarantees may be required.
Applications accepted:
On a year-round basis using the Business and Community Development application.
Approving authority:
Department of Trade and Economic Development.
Disbursement of funds:
As costs are incurred but prorated with other sources of funding.
Contact:
MTED/Business Development and Finance at 612/297-4567 or contact your regional representative at 1-800-657-3858. (back to Table of Contents)
| LowDoc | Designed to increase the availability of funds under $100,000 and streamline/expedite the loan review process. More... |
| FA$TRAK | Designed to increase the capital available to businesses seeking loans up to $100,000 but is currently offered as a pilot with a limited number of lenders. More... |
| CAPLines | An umbrella program to help small businesses meet their short-term and cyclical working-capital needs with five separate programs. More... |
| International Trade | If your business is preparing to engage in or is already engaged in international trade, or is adversely affected by competition from imports, the International Trade Loan Program is designed for you. More... |
| Export Working Capital | Designed to provide short-term working capital to exporters in a combined effort of the SBA and the Export-Import Bank. More... |
| Pollution Control | Designed to provide loan guarantees to eligible small business for the financing of the planning, design, or installation of a pollution control facility. More... |
| DELTA | Defense Loan and Technical Assistance is a joint SBA and DoD effort to provide financial and technical assistance to defense-dependent small firms adversely affected by cutbacks in defense. More... |
| Minority and Women's Prequal | A pilot program that uses intermediaries to assist prospective minority and women borrowers in developing viable loan application packages and securing loans. More... |
| Disabled Assistance | The SBA has not been provided funding for direct handicapped assistance loans, but such individuals are eligible for all SBA loan guaranty programs. |
| Qualified Employee Trusts | Designed to provide financial assistance to Employee Stock Ownership Plans More... |
| Veteran's Loans | The SBA has not been provided funds for direct loans to Veterans, although Veterans are eligible for special considerations under SBA's guaranty loan programs. More... |