Business Loans & Programs
A business, in order to be successful, requires some form of financing. An integral component of starting a successful business is raising sufficient capital. There are many challenges, but numerous resources are available. There are two types of financing: equity and debt. When looking for money, you must consider your company’s debt-to-equity ratio—the relation between dollars you have borrowed and dollars you have invested in your business. The more money owners have invested in their business, the easier it is to attract financing.
The Great Grant Myth
Are grants available for small business or business start-ups? That is on the top of the most frequently asked question list, and the answer is maybe. You will not be able to start a business without investing your own savings or other assets. You will not find a bank willing to lend you 100% of what you need or a government program to fund your business. Many grants geared toward entrepreneurial activities center around the creation of a business plan. More information on business plans is included on our Business Planning page. Additional information on grants can be found through the SBA.
The Kandiyohi County and City of Willmar EDC supports local business growth and can assist with packaging a financing plan that best serves your business and will partner with any of the local lending institutions in Kandiyohi County to provide gap financing for new and expanding businesses.
The EDC is ready to work with you on your project and make your project a reality. The EDC’s loan programs are:
- Entrepreneurs’ Loan Guarantee Program
- Industrial Initiatives Loan Program
- Revolving Loan Fund
Entrepreneurs’ Loan Guarantee Program
The Entrepreneurs’ Loan Guarantee Program is intended to increase the availability of credit otherwise not available based on normal lender underwriting criteria due to the newness of the business, lack of equity, collateral valuation or other problems. The program is not intended to refinance existing debt nor absorb the risks associated with a weak or poorly managed business.
- The applicant must:
- be over 18 years of age;
- be a resident of Kandiyohi County;
- be actively involved in the business; and
- have at least 50% ownership in the business.
- The business must be owned and operated by the borrower less than 36 months and be located in Kandiyohi County.
- The purpose of the loan must be for general business purposes and be eligible under SBA guidelines.
- The minimum loan amount shall be $1,000.
- A business or its related entities’ combined loan amount may not exceed $50,000.
- The maximum guarantee shall be 80% of the outstanding principal balance of the loan(s).
- A loan administration fee of 1% of the loan guarantee amount shall be paid.
Industrial Initiatives Loan Program
The Industrial Initiatives Loan Program is intended to promote economic development in Kandiyohi County and to provide below market rate financing to new or existing service, telecommunications, intellectual property, manufacturing, industrial or wholesale/distribution-based businesses to start or expand in Kandiyohi County. The expansion may include the purchase of equipment, purchase or expansion of an existing facility or construction of a new facility. The collective investments of individuals, businesses and units of government have provided the source of capital to finance these expansions. The participating financial institutions receive the funds in exchange for a commitment to make a loan in an equal amount to an Industrial Initiatives’ approved borrower.
- The money borrowed shall be used for real estate purposes (purchase or expansion of an existing facility or to construct a new facility) and/or equipment purchases.
- The project shall be for a service, telecommunications, intellectual property, manufacturing, industrial or wholesale/distribution-based business as per standard industry classification, and shall meet one or more of the following:
- The borrower shall generate 50% or more of their revenue from outside Kandiyohi County.
- A loan request for the purchase of equipment shall create/retain one job per $20,000 of the request over a five-year period.
- A loan request for building purchase or expansion shall create additional real estate tax base equal to or greater than the loan request.
- Maximum amount of outstanding loans:
- One borrower—$500,000
- Related borrowers—$1,000,000
Revolving Loan Fund
A Revolving Loan Fund is available to provide alternative (gap) financing to for-profit businesses to promote job retention, job creation and the stimulation of private investment in an effort to strengthen and diversify the economy and the tax base of Kandiyohi County. Loans will serve as matching funds to create up to 100% leverage project financing with other borrowing sources to assist existing or new businesses meeting the program eligibility. Loan money is intended to complement, not replace, existing local development and private financing efforts.
- Applicants must be for-profit businesses located in Kandiyohi County, meet the eligibility guidelines of the program, and be an eligible industry category under SBA guidelines.
- Applicants must have adequate collateral and cash flow to service the debt and show additional lending to meet up to 100% leverage guidelines.
- The EDC’s Finance Committee shall recognize that adequate collateral is not a primary consideration in approving loans.
- Applicants must provide a minimum of 10% owner equity as part of the 100% leverage guidelines.
- Applicants must provide, with their application, a personal credit report for principal owner(s) with 20% or more ownership.