Financing

The Hutchinson Economic Development Authority has a number of financial resources available to assist downtown business and local industry. In this section you will find some general information on how economic development projects are funded along with a summary of the financial resources available. By clicking on the program name, you can access detailed information on program requirements, eligibility criteria, rates, terms and contact information.  For an overview of how economic development projects are financed, please read Financing Economic Development Projects.

Hutchinson’s business subsidy policy can be found here.

Financial Resources

A number of resources are available to help finance economic development projects. In this section you can access details on program requirements, eligibility criteria, rates, terms and contact information. Click on a link below to navigate to the program information you’re interested in.

Entity

Resources Available

Hutchinson Economic Development Authority Economic Development Loan Fund
Equipment Loan Fund
Tax Increment Financing
Job Opportunity Building Zone (JOBZ)
Tax Abatement
Downtown Commercial Rehabilitation Loan Program
Downtown Facade Improvement Grant
Downtown Sign & Awning Grant
Mid-Minnesota Development Commission Regional Revolving Loan Fund
Southwest Initiative Foundation Business Finance Program
Microenterprise Loan Program
New Media Lending Program
Prairieland Economic Development Corporation SBA 504 Loan Program
Minnesota Department of Trade & Economic Development Minnesota Investment Fund
Small Business Development Loan Program
Rural Challenge Grant Program
Small Business Administration SBA 7(a) Loan Program
SBA Express Loan Program

HUTCHINSON ECONOMIC DEVELOPMENT AUTHORITY

Economic Development Loan Fund

The Hutchinson Economic Development Loan Fund is designed to provide gap financing for businesses & industry starting up or expanding in the city’s industrial park, although projects at other locations in the city will also be considered. The primary focus of the program is manufacturing and technology related businesses.

Eligibility

  • Businesses must be located, or be willing to relocate, within the city limits of Hutchinson.
  • Manufacturing, assembly, warehousing, research & development facilities, call centers & administrative processing centers are eligible.

Requirements

  • At least one job created is required for every $25,000 in assistance provided.
  • Wages for jobs created must be at least $10.19 per hour, exclusive of benefits.
  • Funds can be used for land & building purchase, building construction, renovation and / or expansion, machinery & equipment, working capital and inventory.
  • Immediate repayment of the outstanding balance is required if the business relocates outside Hutchinson

Rates/Terms

  • Rates range from a flat rate of 2% up to Prime + 3%, as determined by the EDA Board. Typically rates will be similar to those available from a commercial lender.
  • Loan terms up to 10 years are available.
  • Loan amounts up to $150,000 are available.
  • Applicants creating a significant number of jobs or paying higher wages may receive preferential loan terms.
  • The EDA will typically subordinate to other financing sources when needed.

Download the Economic Development Loan Fund Application.

Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for a loan application and additional information.

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Equipment Loan Fund

The Equipment Loan Fund is designed to provide gap financing for businesses & industry that needs to add new machinery and/or equipment. There are no job creation requirements with this program.

Eligibility

  • Businesses must be located, or be willing to relocate, within the city limits of Hutchinson.
  • Manufacturing, assembly, warehousing, research & development facilities, call centers & administrative processing centers are eligible.

Requirements

  • Funds can be used only for machinery & equipment purchases
  • Immediate repayment of the outstanding balance is required if the business relocates outside Hutchinson.
  • There are no job creation requirements for this program.

Rates/Terms

  • Rates range from a flat rate of 2% up to Prime + 3%, as determined by the EDA Board.
  • Loan terms up to 7 years are available.
  • Loan amounts up to $40,000 are available.
  • Applicants creating a significant number of jobs or paying higher wages may receive preferential loan terms.
  • The EDA will typically subordinate to other financing sources when needed.

Download the Equipment Revolving Loan Fund Application

Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for a loan application and additional information.

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Tax Increment Financing

The Hutchinson Economic Development Authority is willing to consider the employment of Tax Increment Financing (TIF) for eligible projects. In a nutshell, the difference between a property’s original property taxes and the property taxes due on a property after it has been improved (called the “tax increment”) can be captured and used to help finance the project.

In all cases the proposed project must pass what is called the “but-for” test, meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. In other words: if the project can be done without TIF, then it is ineligible for this assistance.

For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings.

Different rules apply to each type of TIF district (see below):

  • Economic Development TIF District – A 9-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for industrial-type projects.
  • Redevelopment TIF District – A district that can go up to 25 years and will provide funds for the removal of blighting conditions on a lot (sub-standard buildings, site clean-up, etc.).

Eligibility

  • The Hutchinson City Council, following a public hearing on the proposed project, must approve all TIF Districts.
  • Economic Development TIF
    Industrial, warehousing, research & development and call centers are eligible.
  • Redevelopment TIF
    • Proposed district must contain existing “blighted” development
    • At least 70% of the area must be occupied by buildings or other improvements.
    • At least 50% of the buildings themselves must be substandard, based upon an internal inspection.
    • A building is considered substandard if it would cost at least 15% of a new building to bring the existing building up to current building code requirements.
    • As long as the above requirements are met, any type of project (commercial, retail, industrial) is eligible.

Requirements

  • Economic Development TIF
    • The TIF district must promote new employment, tax base or retain business in the state.
  • Redevelopment TIF
    • At least 90% of the tax increment generated must be used to correct the blighting conditions.

Rates/Terms

  • All TIF districts in the City of Hutchinson will be set up on a “pay-as-you-go” basis – meaning that tax increment will flow back to the developer in semi-annual payments.
  • If the project requires “up-front” financing, a loan may be secured from a private lender, with the projected tax increment being pledged to service the loan.
  • Economic Development TIF
    • Districts can provide tax increment for up to 9 years.
  • Redevelopment TIF
    • Redevelopment TIF district can provide tax increment for up to 25 years.

Contact
For additional information about Tax Increment Financing, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

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Job Opportunity Building Zone

Job Opportunity Building Zones (JOBZ) are designed to stimulate economic activity within certain geographical areas by providing a number of state & local tax breaks for qualified businesses.

Exemptions are provided for:

  • corporate franchise tax
  • state income tax for operators or investors – including capital gains tax
  • sales tax on goods & services used in the zone,
  • property tax on commercial & industrial improvements (but no exemption on land)

Additionally:

  • An employment tax credit is provided for high paying jobs.

Eligibility

  • Eligible businesses include those starting-up or expanding within a designated Zone, businesses relocating from other states and business relocations within Minnesota, provided certain job creation requirements are met.
  • Businesses must locate within a designated JOBZ zone.
  • Retail businesses are not eligible.

Requirements

  • Jobs created must pay at least 110% of the federal poverty level for a family of four (including benefits not mandated by law)
  • Businesses relocating within Minnesota must increase their total employment by at least 5 jobs or 20% of their workforce, whichever is greater. These new jobs must be maintained for the duration of the JOBZ zone.
  • Businesses locating in a JOBZ zone must sign a Development Agreement with the City.

Contact
For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

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Tax Abatement

With Tax Abatement, the city rebates its portion of property taxes back to the property owner who then uses it to help offset development and / or redevelopment costs. Tax abatement is simpler and less restrictive than tax increment financing, and is quite useful for smaller projects.

In addition, the availability of tax abatement is limited – in any given year, for all economic development projects taking place, the city can abate an amount equaling no more than 10% of its current tax levy.

The Hutchinson City Council must approve all tax abatements.

Eligibility

  • Tax abatements can be provided for any type of property.

Requirements

  • The project must provide one or more of the following public benefits: it must increase or preserve tax base, result in job creation, redevelop blighted areas, and / or provide services not currently available to the residents of Hutchinson.

Rates/Terms

  • Taxes can be abated for up to 15 years (in some instances 20 years).

Contact
For additional information about Tax Abatement, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

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Downtown Commercial Rehabilitation Loan Program

The Downtown Commercial Rehabilitation Loan Program is intended to provide an additional financial resource and incentive for downtown property owners to improve their place of business. The goal of the program is to help keep downtown Hutchinson a thriving and attractive place for commercial & retail activity.

Eligibility

  • Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
  • Total debt (including this loan) secured by the property cannot surpass 100% of the assessor’s estimated market value, or the appraised value of the property, whichever is greater.
  • Eligible exterior improvements include windows & doors, painting & other façade improvements, roofs, foundations, lighting, accessibility improvements, parking lots and landscaping.
  • Eligible interior improvements include general remodeling, HVAC, electrical, plumbing and handicap accessibility.
  • Funds cannot be used for security systems, equipment or furniture.

Requirements

  • No more than 30% of the loan can be used for interior improvements other than heating, electrical, plumbing, insulation, handicap accessibility and asbestos abatement.
  • Loans are immediately due if the property is sold or otherwise transferred.
  • All owners must join in the application.
  • All loans must be secured by a mortgage on the property.
  • A personal guarantee is also required.
  • There is a $200 application fee.

Rates/Terms

  • The minimum loan amount is $5,000.
  • The maximum amount available is $30,000 per project regardless of the number of lots.
  • Interest rates are fixed.

Two options are available for interest rates and loan terms:

  • For loans less than $10,000, the term is 7 years at the current prime rate.
  • For loans $10,000 or greater, the term is 10 years at the current prime rate.

Download the Downtown Commercial Rehabilitation Loan Application

Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at (320) 234-5652, or send us an email.

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Downtown Façade Improvement Program

The Façade Improvement Program is a dollar-for-dollar matching grant for property owners in the historic downtown area so they can make exterior improvements and generally improve the “curb appeal” of their property.

Eligibility

  • Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
  • Applicants must provide a personal dollar-for-dollar match for the grant amount awarded.
  • Only one grant per property will be awarded during any given 5-year period.
  • Additions, new buildings, decks and playground equipment are not eligible.
  • Eligible improvements must be viewable from the public right-of-way and may include windows & doors, painting & other façade improvements, exterior lighting and landscaping.

Requirements

  • Any improvements must be completed and inspected prior the disbursement of any grant funds.
  • Work cannot commence until the grant is approved by the EDA Board of Directors and should be completed within 120 days, weather permitting.
  • Invoices must be submitted in order to receive reimbursement.

Rates/Terms

  • Matching grants range from $500 to $2,500.

Download the Downtown Façade Improvement Program Application

Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at (320) 234-5652, or send us an email.

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Downtown Sign & Awning Program

This program is intended to provide property owners with a resource and incentive to add, improve and / or replace signage & awnings in the downtown area.

Eligibility

  • Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
  • Funds can be used only for the repair, improvement, addition, or replacement of signs and/or awnings.
  • Only one grant per business will be awarded during an 8 year period.

Requirements

  • Businesses who lease space must  submit an application that has been completed by them AND the property owner.
  • Work cannot commence until the grant has been approved, and should be completed within 120 days, weather permitting.

Rates/Terms

  • Grants range from $500 to $1,000.
  • Improvements must be completed before any grant funds can be disbursed.

Download the Downtown Sign & Awning Program Application

Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at (320) 234-5652, or send us an email.

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MID-MINNESOTA DEVELOPMENT CORPORATION

The mission of the Mid-Minnesota Development Commission is to provide technical assistance to government, businesses and local organizations; administer state and federal programs, and coordinate multi-jurisdictional activities to maintain or enhance the quality of life in the Counties of Kandiyohi, McLeod, Meeker and Renville.

To that end they have created a revolving loan fund utilizing federal dollars to assist businesses within the four county area.

Regional Revolving Loan Fund

Eligibility

  • Business must be “for-profit”
  • Must be located in McLeod, Meeker, Kandiyohi or Renville County
  • Must have a demonstrated need for gap financing
  • Manufacturing, Retail and Service businesses are eligible

Requirements

  • Job creation is required, preferably 1 job per $10,000 of funds provided
  • Funds can be used for real estate, equipment and / or working capital
  • Amount of loan is generally limited to no more than 1/3 of the total project cost.
  • At least 10% owner equity is preferred, though not always required.

Rates/Terms

  • Loan amounts range from $5,000 to $100,000
  • Interest rates are determined on a case-by-case basis and may as low as 2% below Prime.
  • Typical loan terms are:
    • Working Capital – 5-year maximum
    • Machinery & Equipment – 5-year balloon
    • Real Estate – Up to 10-year term with up to 20-year amortization
  • A $25 application fee and a 1% origination fee is required.
  • Applicant pays all closing, legal and filing fees at the time of closing.

Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email, for additional information. Otherwise you can get in touch with:

Les Nelson
Mid-Minnesota Development Commission
333 West 6th Street
Willmar, MN 56201
Phone: (320) 235-8504
E-mail: midmndevcom@willmar.com

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SOUTHWEST INITIATIVE FOUNDATION (SWIF)

The Southwest Initiative Foundation (SWIF) is a regional foundation funded both by the McKnight Foundation and regional partners from throughout southwestern Minnesota. One of SWIF’s primary goals is to promote community and economic development in the 18 county area.

To help make southwest Minnesota a highly productive, engaged and growing region, the Southwest Initiative Foundation has a number of loan programs available for growing businesses and for facilitating community development projects.

Applicants are encouraged to call or visit the Southwest Initiative Foundation at an early state in the development of their business to complete a needs assessment. This will help determine the level of assistance needed and the overall feasibility of the project.

Assistance is available in both Spanish and Somali.

Business Finance Program

Supports the development and growth of small businesses throughout southwest Minnesota.

Eligibility

  • Businesses must be for-profit and create or retain jobs that provide a livable wage with benefits, generate new wealth for the region and diversify the economy of southwest Minnesota.
  • Applicants must have adequate cash-flow to service debt, compliment SWIF’s loan with lending from the private or public sector and be committed to the 18-county region.

Requirements

  • Funds can be used for machinery & equipment, inventory, working capital and real estate.
  • Adequate collateral is required on all loans.

Rates/Terms

  • Maximum loan amount of $200,000.
  • Loans up to $400,000 are available for renewable energy, food & agriculture, bio-science and manufacturing projects.
  • Interest rate determined using a risk-opportunity analysis, loan terms and current market rates.
  • Term of loan is based on the life of the asset, but generally will be five years. If amortized beyond five years a balloon payment may be required.
  • Loans may be subordinated to the primary lender bank.
  • There is a 1% loan origination fee and all costs associated with the loan are the responsibility of the borrower.

Download the SWIF Loan Program Application

Contact

Amy Woitalewicz
Business Finance Director
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800) 594-9480
E-mail: amyw@swifoundation.org

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Micro-Enterprise Loan Program

Designed to provide loans, education and technical assistance to entrepreneurs and those seeking self-employment opportunities.

Eligibility

  • Both start-up and expansion projects are available.
  • Projects must be located within SWIF’s microenterprise service area which includes the 18 counties of southwest Minnesota plus Benton, Carver, Sherburne, Stearns and Wright counties.
  • Industry sectors include manufacturing, service, retail, child care and value-added agriculture.

Requirements

  • Funds can be used for start-up expenses, equipment, inventory, furniture & fixtures, working capital and real estate.
  • All loans are collateralized with business and / or personal assets.
  • Program requires equity into the project.
  • Borrower will be responsible for loan filing and loan closing fees.
  • A personal guarantee from the borrower is required.

Rates/Terms

  • Loans up to $50,000 are available.
  • Interest rate is fixed at 7.5%
  • Loan terms up to 10 years for real estate and 6 years for equipment.

Download the SWIF Loan Program Application

Contact

Jackie Turner-Lovsness
Program Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800) 594-9480
E-mail: jackiet@swifoundation.org

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New Media Lending Program

The Social Media, Website and Technology Development Quick Loan Program is a low-documentation loan program designed for small business and is intended to provide fast access to technology and online tools. Included is customized support through ongoing technical assistance and training as needed for the length of the loan. Technical assistance includes social media training, website development and technology training and is provided by SWIF staff.

Eligibility

  • Businesses must be located within SWIF’s microenterprise service area which includes the 18 counties of southwest Minnesota plus Benton, Carver, Sherburne, Stearns and Wright counties.

Requirements

  • Funds may be used for software, hardware (including computers, peripherals, tablets and smart phones), website, social media & computer training.
  • Client must be able to describe how the funds would be used and why it will help their business grow.

Download the SWIF Loan Program Application

Contact

Microenterprise Loan Program
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800) 594-9480
E-mail: loans@swifoundation.org

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PRAIRIELAND ECONOMIC DEVELOPMENT CORPORATION

The Prairieland EDC is a nonprofit corporation set up to contribute to the economic development of Southwest Minnesota. As a 504 Certified Development Company (CDC), Prairieland EDC works with the Small Business Administration and private sector lenders to provide financing to small businesses.

Through the SBA 504 Loan Program, Prairieland provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.

Typically, a private lender will provide 50% of the project financing while 40% is funded by a debenture guaranteed by the Small Business Administration. The remaining 10% is equity provided by the borrower. The extent of the SBA’s participation is usually $1,000,000 although $1.3 million may be available under certain circumstances.

SBA 504 Loan Program

Eligibility

  • To be eligible, the business must be operated for profit, have a tangible net worth of less than $7 million, and have an average net income that is less than $2.5 million after taxes for the preceding two years.

Requirements

  • Loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.
  • Funds cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.
  • 1 job must be created for every $35,000 received.

Rates/Terms

  • Interest rates are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.
  • Terms of 10 or 20 years are available.
  • Fees typically total 3% of the debenture.

Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email, for additional information. Otherwise you can contact:

Ann Peterson
Prairieland EDA
1 Prairie Drive
Slayton, MN 56172
Phone: (507) 836-6656
E-mail: ann@prairielandedc.com

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MINNESOTA DEPARTMENT OF EMPLOYMENT & ECONOMIC DEVELOPMENT (DEED)

Minnesota Investment Fund

The Minnesota Investment Fund (MIF) was created to facilitate the creation & retention of high quality jobs on a statewide basis, increase both the local & state tax base, and to improve the economic vitality of the state. The focus of the program is on industrial, manufacturing and technology related businesses.

Eligibility

  • Cities, counties & townships can apply for funding on behalf of an expanding business.
  • Grants are awarded to local governments who, in turn, make loans to qualified businesses.
  • Funds cannot be used for retail businesses, industrial park development or working capital.

Requirements

  • Funds must be used for land, buildings, equipment or training costs.
  • Funds may also be used for infrastructure improvements to support businesses.
  • MIF participation is limited to 50% of total project costs (most projects selected for funding have at least 70% of their financing coming from other sources)
  • Jobs created must pay at least $10.25 / hour cash wages and $11.21 / hour including benefits (defined as life, health, dental insurance plus profit sharing and retirement contributions)
  • 51% of created jobs must go to “low-to-moderate income” people.
  • Job creation requirements also exist, based upon the amount of assistance provided (generally 1 job per $5,000 in assistance)

Rates/Terms

  • Up to $500,000 is available.
  • Interest rates are negotiated
  • Term is up to 20-years for real estate and 10-years for machinery & equipment.

Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for additional information.

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Small Business Development Loan Program

The Minnesota Agricultural and Economic Development Board (MAEDB) administers this loan program in order to promote the creation of jobs and assist business expansions in the state. The MAEDB issues industrial development bonds backed by a state-funded reserve of 25% and uses the proceeds to provide loans to businesses.

Eligibility

  • Manufacturing and industrial businesses located or intending to locate in the state are eligible.
  • The company must meet the Small Business Administration definition of a small business to be eligible under this program – generally firms with less then 500 employees meet this criterion.

Requirements

  • Project must create a “significant” number of new jobs.
  • Funds can be used for land, buildings, machinery & equipment and project administration costs.
  • Working capital and debt refinancing are not eligible.
  • At least 20% of project costs must be privately financed through equity (25% is required for equipment)
  • First position on real estate or equipment is required along with personal guarantees of the owners. Other security may be required.
  • Bond issuance costs of 4% are capitalized with the loan principle.
  • 10% of the bond issue must be escrowed.

Rates/Terms

  • Amounts from $500,000 to $6 million are available.
  • Rates are fixed and are determined by the market rate for similar securities at the time the bonds are sold.
  • Term is up to 20 years for real estate and 10 years for equipment, not to exceed 80% of its useful life.

Contact
For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

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Rural Challenge Grant Program

The Rural Challenge Grant Program provides low interest loans to new or expanding businesses in order to provide job opportunities for low-income individuals, encourage private investment and promote economic development in greater Minnesota. The Southwest Initiative Foundation manages the program here in Hutchinson but the Minnesota Department of Trade and Economic Development provides final loan authorization.

Eligibility

  • Businesses located or intending to locate in any of Minnesota’s 80 non-metro counties are eligible.
  • Business start-ups or expansions are eligible.

Requirements

  • Projects must create or retain jobs for low income individuals.
  • A financing gap must exist.
  • Cash flow must be sufficient to cover the projected debt service.
  • Funds can be used for property acquisition, site improvements, new construction, building renovation, machinery & equipment and working capital.
  • Participation is limited to 50% of total project costs (each dollar must be matched by at least one dollar of non-public funds).

Rates/Terms

  • Up to $100,000 is available, although loans to retail businesses are limited to $20,000.
  • Rates range from 3% to 10%.
  • Terms will be consistent with the other sources of project financing.

Contact
For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

At the Minnesota Department of Employment & Economic Development, contact Bart Bevins at (800) 657-3858 or via email at bart.bevins@state.mn.us.

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SMALL BUSINESS ADMINISTRATION

The 7(a) Loan Guaranty Program is one of SBA’s primary lending programs. It provides loans to small businesses that are unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders, which provide loans that are, in turn, guaranteed by the Small Business Administration. The SBA has no funds for direct lending or grants.

Eligibility

  • Most types of businesses are eligible as long as they are for-profit and operate in the United States.
  • The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast majority of businesses meet this definition.

Requirements

  • Funds can be used for real estate, machinery & equipment, inventory and working capital.

Rates/Terms

  • $2 million is the maximum loan available under the 7(a) program, although $1 million is the maximum exposure of the SBA under a guarantee.
  • For loans of $150,000 or less, the SBA guarantees 85% of the loan
  • For loans greater than $150,000, the SBA guarantee is 75%
  • Interest rates may be fixed or variable and are negotiated between the lender and borrower subject to SBA guidelines, loan size and the term of the loan
Loan Size Term Maximum Interest Rate
$50,000 or more More than 7 yrs
Less than or equal to 7 yrs
Prime + 2.75%
Prime + 2.75%
$25,000 to $50,000 More than 7 yrs
Less than or equal to 7 yrs
Prime + 3.75%
Prime + 3.75%
$25,000 or less More than 7 yrs
Less than or equal to 7 yrs
Prime + 4.75%
Prime + 4.75%
  • Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working capital (although under certain circumstance this can be stretched to 10 years).
  • Guarantee fees apply based upon the size of the loan:
Loan Size Guaranty Amt.
$150,000 or less$150,000 to $700,000More than $170,000 1%2.5%3.5%
  • All loans are subject to a 25 basis point annualized servicing fee on the outstanding balance of the guaranteed portion of the loan.
  • Finally, there are penalties for pre-payment

Contact
Most lenders are familiar with SBA loan programs so interested applicants should contact their local lender for further information and assistance in the SBA loan application process.

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SBA Express Loan Program

The SBA Express loan program is a simplified loan guarantee program that is essentially the same as its 7(a) loan program. The Express program is typically much faster and easier than the 7(a), however loan amounts cannot exceed $350,000. The SBA guarantees 50% of the loan and credit decisions are typically made within 36 hours.

Eligibility

  • Most types of businesses are eligible as long as they are for-profit and operate in the United States.
  • The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast majority of businesses have no trouble meeting this definition.

Requirements

  • Funds can be used for real estate, facility expansion or conversion, machinery & equipment, inventory & supplies, working capital, to purchase an existing business and to refinance existing business debt that is not already structured with reasonable terms & conditions.
  • Loan proceeds cannot be used to effect a partial change of business ownership, to reimburse funds owned to an owner, to pay delinquent taxes or for any unsound business purpose.

Rates/Terms

  • Maximum loan amount is $350,000
  • Interest rates are negotiated between the borrower and lender, may be fixed or variable, depend upon the size of the loan and are tied to the prime rate.
Loan Size Maximum Interest Rate
Over $50,000$50,000 or less Prime + 4.5%Prime + 6.5%
  • There is a 2% guaranty fee for loans up to $150,000 and a 3% guaranty fee for loans over that amount.
  • Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working capital (although under certain circumstances this can be stretched to 10 years).
  • Collateral may not be required for loans up to $25,000 – the bank making the actual loan makes this determination.

Contact
SBA Express loans are arranged through your local lender.

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