How to Get Funding for a Small Business in Minnesota

Loans and a few grants may be available to help fund your small business in Minnesota.

Minnesota is one of the best states to open a business in, according to John C. Hottinger, a consultant writer for MinnPost.com. The state's commitment to educating its work force and the quality standards of living in its communities attract businesses. However, the financial climate during 2010 has made getting business loans more difficult in Minnesota and other states, as bankers have restricted business funds to profitable businesses. As you make plans to open a small business in Minnesota, look to business loans, tax incentives, and grants for the funding to get your business started.

Things You'll Need

• Financial balance and statement accounts for your business
• Resumes for key employees
• Marketing materials
• Business plan

Instructions

1. Apply for a business loan from the Small Business Administration. These are federal loans available to business owners throughout the country. The Minnesota Business Finance Corporation (MBFC) originates and services SBA 504 loans from the Small Business Administration. The MBFC website describes the program as "economic development financing specifically designed to stimulate private-sector investment in long-term fixed assets to increase productivity, create new jobs and increase the local tax base." Some of the loans available are the Basic 7 (a), CAPLines, Patriot Express, SBAExpress, and Small and Rural Advantage. Other programs include long-term fixed-asset lending and export loans.

2. Apply for a SBA 7(m) microloan from a microloan lender that will also provide technical assistance to small businesses. These lenders only operate within their service areas. It is not a statewide program. Some include the Neighborhood Development Center in St. Paul, the Southwest Initiative Foundation in Hutchinson, and the Northwest Minnesota Foundation in Bemidji.

3. Obtain venture capital funding from a Small Business Investment Center (SBIC) in your area of Minnesota. A list of SBICs can be found on the Small Business Administration's website. Some of them include Medallion Capital, Inc., in Burnsville, Milestone Growth Fund, Inc. in Minneapolis, and Agio Capital Partners I, L.P., in Edina.

4. Apply for a business tax-incentive program from the Minnesota Department of Employment and Economic Development. Several programs are available, including the Border Cities Enterprise Zone Program and the SEED Capital Investment Credit Program. The department also offers several business loan programs, including the Minnesota Reservist and Veteran Business Loan Program.

5. Contact the U.S. Department of Agriculture's (USDA) Rural Development Office for information about its loans and grants available to Minnesota farmers and rural small-business owners. The USDA Rural Development Office in Minnesota is at

   410 Farm Credit Service Building

   375 Jackson Street

   St. Paul, MN 55101

   Contact the USDA Rural Develoment office at 651-602-7800.

6. Expand your business in one of Minnesota's Job Opportunity Building Zones. This program allows businesses to expand in areas targeted for development outside the Twin Cities area, and it provides local and state tax exemptions.

7. Contact your local small-business development center to find out if local small-business funds are available. You also can seek business financing information from the local chamber of commerce, business associations, or professional associations related to the type of business you want to start. Some small-business grants specifically for women and minorities also may be available.

Tips & Warnings

• Beware of the many "free money from the government for your business" scams.

References

• Minnesota Small Business Resource Guide
• DEED: DEED Business Financing Programs
• DEED: The Truth about Business Grants
• Minnesota Public Radio: Small Businesses Having Harder Time Taking Out Loans
• Minnesota Business Finance Corporation

Resources

• SBICs Licensees Located in Minnesota on September 02, 2010
• Positively Minnesota: Tax-Free Development (JOBZ)
• Positively Minnesota: Federal Rural Development Financing