State Small Business Credit Initiative

The State Small Business Credit Initiative (SSBCI) uses federal funding to stimulate private-sector lending and improve access to capital for small businesses and manufacturers that are credit worthy but not getting loans they need to expand and create jobs.

The initiative allocates up to $15.4 million into four state programs: the Capital Access Program, Emerging Entrepreneurs Fund, Small Business Loan Guarantees and the Angel Loan Fund. To learn more about each fund, select the tabs below.

With a goal of attracting $10 of private investment for each federal dollar invested, the SSBCI is expected to spur more than $150 million in lending to small businesses statewide and fuel the creation of more than 3,000 new jobs in Minnesota.

Angel Loan Fund

Minnesota’s Angel Loan Fund Program (ALF) provides a new funding option for businesses certified to participate in Minnesota's Angel Tax Credit Program.

The program provides a direct loan for 10 percent of the total amount of equity investment received in the business’ approved funding round. Only one loan may be issued to each business for the duration of the ALF.  At least one equity investment must be made by an investor that is both certified by the MN Angel Tax Credit Program and qualified as an Accredited Investor per the U.S. Securities and Exchange Commission under Rule 501 of Regulation D.  However, the total equity investment attained for the round is not exclusive to investments made to meet the requirements of the Angel Tax Credit Program.

Eligible Applicants

Businesses certified to participate in the Angel Tax Credit Program during any of the program years with fewer than 500 employees.

Eligible Use of Funds

Funds may be used for start-up costs, working capital, business acquisitions and expansions, franchise financing, equipment loans, inventory financing, construction, and commercial, non-passive real estate acquisitions.

Maximum Available

10 percent of equity raised after program enrollment; $20,000 minimum loan amount, $250,000 maximum.

Interest Rates and Terms

Zero-percent interest, seven-year term, non-recourse, deferred, with a balloon.  If the business is sold during the term, business will submit risk mitigation fee compensation equal to 30 percent of the original loan principal.

Application Process

1) Business obtains Minnesota Angel Tax Credit Program Certification during any of the program years.

2) Business submits the ALF Business Enrollment Application Form and required supporting documents to DEED.

3) Business receives ALF Acceptance Letter from DEED outlining maximum loan amount and eligible funding round beginning and end dates. Do not accept any funds until you receive official notice that you've been approved to participate in the program.

4) Business submits the ALF Proof of Investment and Loan Request Form and supporting documents, once maximum investment has been raised during the eligible funding round.

5) Business submits signed ALF Loan Agreement, ALF Promissory Note, and ALF Sales Proceeds Agreement.

6) DEED distributes loan proceeds.

While $6.7 million has been allocated to the ALF, loans in excess of the currently available $3.5 million will require receipt of an additional tranche of SSBCI funding from the U.S. Department of the Treasury.  There may be a delay in ALF loan disbursements while funds are being requested.  Although DEED expects funds to be available, there is no guarantee of funds if DEED does not obtain funding from the U.S. Department of the Treasury, or if funding cannot be continued at a level adequate to allow payment all the total allocation.  

Application and Forms

Select the links below to view, download or print these forms:

For More Information

Abdullahi (Moe) Mohamed  
651-259-7456 or 800-657-3858  
Email: Abdullahi.Mohamed@state.mn.us

Download a printer-friendly ALF program fact sheet.

Capital Access

The Capital Access Program encourages banks, credit unions, and community development finance institutions operating in Minnesota to make loans that fall just outside the lenders' normal underwriting standards.

The program provides portfolio insurance based on a separate loan loss reserve account funded by the borrower, lender, and the state. The loans enrolled may be for industrial, commercial, or agricultural purposes. Loans for lines of credit are also accepted.

Eligible Applicants 

For-profit Minnesota businesses that have up to 500 employees company-wide.

Eligible Projects

CAP funds may be used for start-up costs, working capital, business acquisitions and expansions, franchise financing, equipment loans, inventory financing, construction, and commercial, non-passive real estate acquisitions. Projects that include passive real estate are only allowed on a limited basis as determined by U.S. Department of the Treasury guidelines. Financing of existing debt is not permitted.

Maximum Available

The maximum loan amount that may be enrolled is $5 million.

Other Funds Required

Lender and borrower contribute, in equal parts, a combined 3-percent to 7-percent of the loan amount to the reserve fund. The Minnesota Department of Employment and Economic Development (DEED) matches the combined contribution amount.

Interest Rates and Terms

Each qualified program lender has authority to determine interest rates, terms, and collateral requirements.

Application Process

Participating lenders accept applications on a rolling basis. Lenders use their own underwriting standards and loan processes. DEED provides its contribution when a lender submits a loan enrollment form and notifies the state that it has approved a loan and deposited funds into its reserve account.

CAP Forms

Select the links below to view, download or print these forms:

For More Information

Bart Bevins
Capital Access Program
651-259-7424 or 800-657-3858
E-mail: Bart.Bevins@state.mn.us


Emerging Entrepreneurs

The Emerging Entrepreneurs Fund primarily supports micro-enterprises and small businesses with fewer than 50 employees, targeting minority- and women-owned businesses and those located in economically distressed areas.

Eligible Applicants

Businesses with fewer than 500 employees company-wide are eligible. However, the funding is focused on micro-enterprises and businesses with fewer than 50 employees.

The majority of the businesses receiving financial support through this program will be owned and operated by a woman or a minority or will be located in areas identified by DEED as distressed. Distressed areas are measured by population loss, higher than statewide average unemployment rate, and lower than statewide median household income.

Eligible Projects

EEF funds may be used for start-up costs, working capital, business procurement, franchise fees, equipment, inventory, as well as the purchase, construction renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment. Projects that include passive real estate are only allowed on a limited basis as determined by U.S. Department of the Treasury guidelines. Financing of existing debt is not permitted.

Maximum Available

EEF funds may total up to $150,000 per loan and must be matched on at least a one-to-one basis. Participating lenders are encouraged to structure loan proposals to achieve at least a 5:1 leverage of program funds.

Interest Rates and Terms

Each qualified program lender has authority to determine interest rates and collateral requirements within program guidelines.

Application Process

Qualified lenders accept applications on a rolling basis. Application forms and procedures vary by lender. Businesses should apply with participating lenders. DEED is notified of all loans approved to ensure that all program guidelines are followed.

Program Forms

Select the links below to view, download or print these forms:

For More Information

Bart Bevins
651-259-7424 or 800-657-3858
E-mail: Bart.Bevins@state.mn.us


Loan Guarantee Program

The Small Business Loan Guarantee (SBLG) Program guarantees up to 70 percent of a loan made by non-traditional lenders like CDC’s, CDFI’s, and other nonprofit lenders. Banks and credit unions will benefit by a reduction in overall financing risk.

Eligible Applicants

Loans must be made to businesses with no more than 500 employees company-wide.

Eligible Projects

Funds may be used for construction; remodeling or renovation; leasehold improvements; purchase of land, buildings, machinery and equipment; maintenance or repair; expenses related to moving into or within Minnesota; and working capital (if secured by fixed assets). Projects that include passive real estate are only allowed on a limited basis as determined by U.S. Department of the Treasury guidelines.

Maximums Available

The entire finance package, including non-SSBCI funds, may not exceed $20 million. The program guarantees up to 70 percent of the loan.

Other Funds Required

Lenders must demonstrate that a bank or commercial lender will match the guaranteed loan amount. Loans from this fund may not be used to guarantee the un-guaranteed portion of SBA loans. Lenders participating in the loan guarantee programs pay a fee of 0.25 percent of loan principal into a reserve fund.

Interest Rates and Terms

Interest rates and terms are negotiated between borrower and lender. Loans generally require a debt coverage ratio of at least 1.25 and a current ratio of 1.2.

Application Process

Program-approved lenders submit loan enrollment applications to the Minnesota Department of Employment and Economic Development on a rolling basis.

Program Forms

Select the links below to view, download or print these forms:

For More Information

Lisa Dargis
Small Business Loan Guarantees
651-259-7446 or 800-657-3858
Email: Lisa.dargis@state.mn.us