Business Finance Assistance

A financing package can be customized depending on your business needs. Most of the assistance comes in the form of low-interest loans that help in securing a primary lender or investor.

City Of Olivia / EDA

The following incentives may be offered to qualified applicants within the City of Olivia by/through the Olivia EDA.

Tax Increment Financing (TIF)
Tax increment financing is a tool, which allows the City/EDA to reimburse the company or land owner a portion of the new property taxes, which are generated as a result of an expansion project. The amount of financial assistance available (TIF) is dependent upon a number of factors including but not limited to the assessed market value of the building and the financial need of the company. Several types of TIF districts are authorized by state law.

Tax Abatement
Like TIF, tax abatement is a tool, which allows the City/EDA to reimburse the company a portion of property taxes, which are generated within a specified period of time. The difference between TIF and tax abatement is that with tax abatement the County and/or school district have an option to participate (with TIF participation it is mandatory). The amount of the tax abatement available depends on a number of factors, including, but not limited to the financial need of the company and participation by County and school entities. The term of tax abatement is up to twenty years depending on a number of variables.    

Olivia Revolving Fund
The EDA has established a revolving loan fund. Proceeds can be used for land purchase, construction, equipment purchase, inventory, and working capital. The maximum loan available is $17,500. Terms are subject to EDA approval, however, maximum length is not to exceed ten years.

 Southern Minnesota Initiative Foundation (SMIF)
SMIF is one of six Minnesota Initiative Foundations created by the McKnight Foundation in 1986 in response to the farm crisis in Minnesota. SMIF promotes regional economic development and opportunities with a focus on early childhood development and entrepreneurs.

SMIF administers several loan programs and two grant programs targeted to projects that promote collaboration and contribute positively to early childhood development and/or entrepreneurial development.

Industrial Revenue (Development) Bonds (IDB)
IDBs are private activity bonds (small issue manufacturing bonds) issued by cities or EDAs on behalf of private borrowers to finance the fixed costs of manufacturing facilities. IDBs may be utilized if the company owns or is leasing the facility. The bonds are marketed on their financial strength. Financial statements of the company do not need to be disclosed to investors. If the company is interested in this option, the City or EDA would proceed with requesting an allocation for funds from the state of MN, following submittal of the required pre-application. 

Small Business Development Loan Program (DEED)
This state program is available to manufacturing or industrial small businesses (500 employees or less) whichcreate a significant number of new jobs. Eligible projects include business expansions with funding for acquisition of land, building, equipment and/or building construction or renovation.

 Minnesota Investment Fund
The Minnesota Department of Employment and Economic Development (DEED) offers a program, which is agrant to the community that in turn makes a low interest loan to a company for land, buildings, equipment and infrastructure improvements.

Small Business Association (SBA) Loan/Grant
The U.S. Small Business Administration does not offer grants to start or expand small businesses, though it does offer a wide variety of loan programs for business start-ups and expansions including 7(a), 504 and disaster assistance.

SBA 7(a) loans are the most basic and most used type loan of SBA’s business loan programs. The ‘7(a)’ namecomes from section 7(a) of the Small Business Act, which authorizes the SBA to provide business loans to American small businesses. A key concept of the 7(a) guaranty loan program is that the loan actually comes from a commercial lender not the Government. All 7(a) loans are provided by commercial lenders called‘participants’ because they participate with SBA in the 7(a) program. Not all lenders choose to participate, but most American banks do. There are also some non-bank lenders who participate with SBA in the 7(a) programwhich expands the availability of lenders making loans under SBA guidelines.

 7(a) loans are only available on a guaranty basis. This means they are provided by lenders who choose to structure their own loans by SBA’s requirements and who apply and receive a guaranty from SBA on a portionof this loan. The SBA does not fully guaranty 7(a) loans. The lender and SBA share the risk that a borrower will not be able to repay the loan in full. The guaranty is a guaranty against payment default. It does not cover imprudent decisions by the lender or misrepresentation by the borrower. Under the guaranty concept,commercial lenders make and administer the loans. Under the program a business applies to a commercial lender for their financing. The lender decides if they will make the loan internally or if the application has some weaknesses which, in their opinion, will require an SBA guaranty if the loan is to be made. The guaranty which SBA provides is only available to the lender. It assures the lender that in the event the borrower does not repay their obligation and a payment default occurs, the Government will reimburse the lender for its loss, up to the percentage of SBA’s guaranty. Under this program, the borrower remains obligated for the full amount due.

The 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed rate financing for major assets: Purchase land & improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; constructing, modernizing, renovating or converting existing facilities; and purchasing machinery & equipment. 504 program loan proceeds cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. See “Minnesota Business finance Corporation” heading below for more information on the 504 loan program.

 The SBA Disaster Assistance Program provides financial assistance for those who are trying to rebuild their businesses in the aftermath of a declared disaster. SBA Disaster Assistance is a loan program to help businesses with long-term rebuilding and repairing pursuant to a declared disaster.

Minnesota Business Finance Corporation (MBFC)
The Minnesota Business Finance Corporation (MBFC) is a Certified Development Company authorized by the U.S. Small Business Administration to originate and service SBA 504 loans.

 The SBA 504 loan program is “the money that makes America work.” As a nonprofit CDC, MBFC, a member of the National Association of Development Companies (NADCO), promotes economic development throughout Minnesota. The SBA 504 loan program is 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. This is done by providing long-term, low down payment, reasonably priced, fixed-rate loans to businesses which have the highest probability of successfully creating new jobs and competing in the world marketplace. Program specifications; Structure: 50% bank or nonbank in 1st lien position; 40% SBA 504 in 2nd lien position; and 10% equity injection. New business or special-purpose building will require 15 percent equity injection. New business and special-purpose building will require 20 percent equity injection. Advantages of 504: Long-term, fixed-rate financing; terms – 20 years on real estate; 10 years on equipment; and, low equity injection- 10 to 20 percent preserves working capital and increases return on equity.

USDA: Rural Business Cooperative Service, Business and Industry Guarantee Program
Loan guarantee (up to 80%) to individuals, partnerships, corporations, cooperatives or non-profits for improving private business enterprises. Loans can be for business creation, expansion or refinancing and used for land acquisition, facility construction, equipment purchases and/or working capital. Terms depend on proposed collateral but are typically seven years for working capital, 15 years for equipment and 20 years for real estate. Requires 20% equity injection for new businesses or 10% for existing businesses. Applications accepted year round.

 
Tax Increment or Tax Abatement Assistance
Eligible Uses: Land acquisition, demolition, site preparation, and public improvements
Tax Increment and tax abatement are a tools to encourage development by funding certain eligible project costs.
Job & Wage Goals required.

Available Land and Buildings
Detailed information about land and buildings available in the Olivia area from the Minnesota Department of Trade & Economic Development.

Olivia EDA Revolving Loan Fund
Eligible Uses: Land, Building, Equipment, Inventory, and Working Capital
Loan Amount: Up to $17,500
Terms: Rate set by EDA, Loan repayment not to exceed 10 years

Southwest MN Foundation
800-594-9450 320-587-4848
Fax: 320-587-3838

Revolving Loan Fund (Challenge Grant)
Eligible Uses: Working Capital, Machinery, Equipment, Land & Building Acquisition and Renovation.
Loan Amount: Up to $200,000, Up to 50% of the project.
Terms: 2% below prime, 5-year renewable terms
Job & Wage Goals: 1 Job per $15,000 of loan proceeds

Business Finance Micro-Loan Program
Eligible Uses: Working Capital, Inventory, Machinery & Equipment, And Leasehold Improvements
Loan Amount: Up to $100,000, Up to 33% of project
Terms: Prime plus 2%, 5-year renewable terms

Mid-MN Revolving Loan Fund 320-235-8504
Eligible Uses: Working Capital, Inventory, Machinery & Equipment
Loan Amount: Up to $500,000
Terms: Rate: Negotiated (generally 4-6%), Repayment depends on use.
Job & Wage Goals required.

DEED MN Investment Fund
Eligible Uses: Land, Buildings, Equipment
Loan Amount: Up to $500,000, Up to 50% of project
Terms: Negotiated (generally 4-6%), Loan maturity depends on use.
Job & Wage Goals required.

SBA 504 (MN Business Finance Inc) 800-593-0123 320-255-1685
Eligible Uses: Land, Buildings, Equipment
Loan Amount: Up to 40% of project, Up to $750,000
Terms: Fixed, below-market interest rates, 10-20 years
Structure: 50% lender; 40% MBFI 504 Loan; 10% owner’s equity /community contribution

JOBZ Program (35 acres available in various locations.)

All these programs have a fairly simple application process that we can assist with. We are also available to help with site selection and the development process.
I may be reached at 320-523-2361 or slothert@olivia.mn.us

Susie Lothert – Olivia Economic Development Director.