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Metro MSP Financing & Incentive Programs Businesses considering a location or expansion in the Metro MSP region may be eligible for financing and incentive programs offered through the State of Minnesota, individual counties, and cities in the 11-county region. Options include TIF financing, low-interest loans, grants, tax incentives, training programs and small business assistance. Tax increment financing (TIF) is used by cities and counties in the Metro MSP region to induce a development or redevelopment that otherwise would not occur and/or to finance public infrastructure related to that development. Upfront costs may be financed through bonds, inter-fund loans by the development authority, and/or pay-as-you-go financing by the developer. Tax abatement to support economic development is also used by cities, counties, and school districts. Similar to TIF, abatement has fewer legal requirements and is more flexible than tax increment finance. To learn about TIF, tax abatement and other financing and incentive options available in the Metro MSP region, contact the economic development professional in cities of interest to your business, or contact the Minnesota Department of Employment and Economic Development (DEED): Kevin McKinnon, Director of Business Development
The availability of venture capital has fueled high-growth start-ups in Minnesota. In 2008, Minnesota firms received $495 million in venture capital investment, ranking ninth nationwide and sixth per capita. Venture capital-backed Minnesota companies performed well compared against peers nationally. From 2006 to 2008, they generated the sixth highest annual employment (2.4%) and revenue (6.4%) growth in the nation. The medical device industry attracted nearly $290 million, or 59 cents of every dollar in venture capital investments in the state. Other sectors receiving large venture capital investment were industry and energy ($91 million or 18%) and retailing and distribution ($56 million or 11%).
Minnesota Investment Fund provides below-market grants to expanding businesses needing to acquire fixed assets (equipment, buildings or land) that would help them add or retain high-quality jobs. All types of businesses, except retail, are eligible to apply. Grants are awarded to local units of government, which in turn provide loan assistance to expanding businesses. Cities, counties, townships and recognized Indian tribal governments are eligible to participate. All projects must meet minimum criteria for private investment, number of jobs created or retained, and wages paid. The maximum grant amount is $500,000. At least half of total project costs must be privately financed through owner equity and other lending sources. Most successful applications have at least 70% private financing. Grant terms extend to 20 years for real estate and 10 years for machinery and equipment. Interest rates are negotiated. Applications are accepted on a year-round basis. Minnesota Small Business Development Loan Program provides loans at below-market rates to established manufacturers with fixed asset expansion costs in excess of $1 million. The program is designed to create jobs and support business expansion. Small manufacturing and industrial businesses (those with less than 500 employees) located or intending to locate in Minnesota are eligible to apply. Maximum loans are $5 million. Generally, 20% percent of the project costs must be privately financed through equity or other sources. Real estate loans are for a maximum of 20 years. Equipment loans are for 10 years. Applications are accepted on a year-round basis. Urban Initiative Loan Program provides fixed asset and working capital financing to minority-owned/operated businesses and other businesses that are creating jobs for low-income people in Minneapolis, Saint Paul and inner-ring suburbs. The Urban Initiative Board partners with local nonprofit organizations to provide loans and technical assistance to start-up and expanding businesses. State funds must be matched by private funds, generally provided through the nonprofit partner. The maximum total loan available is $300,000. Interest rates are 2-10%. Minnesota Indian Business Loan Program supports the development of Indian-owned and -operated businesses throughout Minnesota. Eligible applicants must be enrolled members of a federally recognized, Minnesota-based band or tribe. Eligible loan projects include start-up and expansion costs – including normal expenses such as machinery and equipment, inventory and receivables, working capital, new construction, renovation, and site acquisition. Financing of existing debt is not permitted. Loans are limited to 75% of the cost of the project being financed. Non-real-estate loans are limited to 10 years. Owners must provide a portion of the financing, generally in the 5-10% range. Applications are accepted on an ongoing basis and must include a business plan.
Bioscience Zones give existing and start-up bioscience companies in those zones greater access to educational institutions and provide tax incentives to facilitate their growth. Bioscience zones in the Metro MSP region are located in Saint Paul and Minneapolis.
Minnesota Job Skills Partnership awards grants to educational institutions that partner with businesses to develop training or retraining programs for existing employees. Funds may be used for training-related costs or educational infrastructure improvements needed to support businesses located or intending to locate in Minnesota. Participating businesses must provide matching funds in the form of cash or in-kind contributions. Funds are available for program planning as well as training. Special training programs are available for workers in healthcare, human services and other high-demand fields. Short-term, no-interest loans are also available to businesses needing to invest in workforce training. Interested businesses may contact a participating community or technical college in the Metro MSP region. Minnesota Pathways Program provides grants of up to $400,000 to educational institutions developing training programs for individuals transitioning from public assistance to work. The programs must include the active participation of private employers. Programs are designed to meet employers’ specific needs. Grants are awarded to accredited Minnesota public and/or private educational institutions with partnering businesses. Preference is given to projects that provide employment benefits and defined career paths. Participating businesses are required to make a cash or in-kind matching contribution. Funds may be used for training-related costs or educational infrastructure improvements necessary to support businesses located or intending to locate in Minnesota. Wage subsidies and tuition reimbursements are not covered. Projects last an average of one-to-three years.
Revolving Loan Funds The Minnesota Public Facilities Authority administer several revolving loan funds to help local governments construct and upgrade public infrastructure to support the needs of new and expanding businesses.
Small Business Development Resources Minnesota Small Business Development Loan Program provides loans at below-market rates to established manufacturers with fixed asset expansion costs in excess of $1 million. The program is designed to create jobs and support business expansion. Small manufacturing and industrial businesses (those with less than 500 employees) located or intending to locate in Minnesota are eligible to apply. Maximum loans are $5 million. Generally, 20% percent of the project costs must be privately financed through equity or other sources. Real estate loans are for a maximum of 20 years. Equipment loans are for 10 years. Applications are accepted on a year-round basis, U.S. Small Business Administration provides a range of programs to help small businesses prosper. These include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and veterans. The Metro MSP region also offers a variety of local small business development resources.
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