The purpose of public financial assistance (including loans) is to provide “gap” funding to supplement conventional bank financing for new and existing business expansion, to retain and / or create jobs, expand the local tax base and encourage new business investment in the community.
The Hutchinson Economic Development Director will gather all necessary information on the project from the interested business or individual and verify that the proposed project is eligible for loans and /or other public financial assistance.
Once all the required information has been obtained, the EDA Director will make a report and presentation to the Finance Team of the Economic Development Authority (EDA) at their regularly scheduled monthly meeting. The applicant may be requested to attend this meeting to provide additional information about the project and answer any questions the Finance Team might have. The Finance team will then review all information provided and make a recommendation to the EDA Board of Directors to either approve or reject the loan application.
At its regularly scheduled monthly meeting, the EDA Board will then review all information provided along with the recommendation of the Finance Team prior to considering final approval of the loan. No public financial assistance shall be made available prior to authorization of the EDA Board.
The following documents must be submitted in order to apply (you will be given the option to upload the files while completing the online application or you can drop off the documents at the Hutchinson City Center located at 111 Hassan Street SE, Hutchinson, MN 55350):
- Business Financial Profit & Loss Statements (3 years previous & most recent)
- Business Financial Balance Sheets (3 years previous & most recent)
- Resumes of Principals
- Personal Financial Statements of Principals
- Most recent Personal Income Tax Statement
- Most recent Business Income Tax Statement
- Evidence of Payroll Tax Payment
- Appraisals / Proposed Lease / Purchase Agreement(s) (as appropriate)
- Commitment Letter(s) from all other project funders (stating terms and conditions of financing)
- Corporate / Partnership Authorization (if applicable)
The EDA Finance Team will evaluate all submitted information, specifically looking at the strengths & weaknesses of the business, its potential for success, its overall credit worthiness and how well the project supports the economic development goals of the community.
Incomplete applications will not be reviewed; however if the applicant can provide a written explanation of the circumstances that prevent a complete application from being submitted, that may be considered.
Upon approval by the EDA, and the City Council when required, all necessary legal documents will be prepared. All fees related to document preparation, along with any legal and recording fees are the responsibility of the borrower. All applicable fees are due prior to the disbursement of loans and/or other public financial assistance.
- Businesses must be located, or willing to relocate, within the corporate boundaries of the City of Hutchinson.
- Manufacturing, assembly, warehousing, research & development facilities, data centers, call centers & administrative processing centers are eligible.
- Retail & service businesses are not eligible under this program.
Eligible Uses of Funds
- Land & building purchase
- Building construction
- Building renovation / expansion
- Machinery & equipment
- Working capital
Ineligible Uses of Funds
- Purchase of equity positions in business enterprises
- Refinancing of existing debt
- $20,000 to $150,000 is available
- The EDA reserves the right to approve loan amounts less than the amount requested.
Loan Terms Available
- Up to 10-year terms are available
- Each loan term will be determined on a case-by-case basis.
- Equipment loans will generally not exceed 5-7 years and will not go beyond the depreciated life of the asset being financed.
- Ranging from a rate of 2% to Prime Interest Rate + 3%
- Interest rates will be fixed.
- Interest rates are determined on a case-by-case basis as recommended by the EDA Finance Team & EDA Board.
Job Creation & Wage Requirements
- At least 1 full-time or FTE job must be created for each $25,000 borrowed.
- Jobs created must pay minimum wages as stated in the City of Hutchinson’s Business Subsidy Policy.
- Because the EDA loan fund provides “gap” financing only, a bank or other financial institution must be involved in the project as the primary lender.
- Approved borrowers are responsible for all legal fees, document preparation costs, recording & filing fees.
- No origination or application fees apply.
- The borrower must provide a minimum of 10% of total project costs as equity.
- Personal guarantees are required of all persons having 20% or more ownership of the business.
- The EDA Finance Team and EDA Board will review and take into consideration loan collateral coverage.
- The EDA may take a subordinate collateral position to other lenders.
- It is required that the project have capable, skilled management through demonstrated experience or expertise in the applicant’s industry, either through previous successful business ownership or through appropriate managerial support services.
- Applicants must demonstrate adequate historical and / or pro-forma cash flow for the proposed new debt.
- The EDA may include late penalties for loan payments made after their due date.
Loan Disbursement Policy
- The EDA will place restrictions on the disbursement of loan funds.
Considerations in setting Interest Rates
- Size of loan
- Length of loan
- Use of loan
- Inflationary expectations
- Interest rate expectations
- Perceived risk of project
- Amount of owner equity
- Presence / absence of other funding sources
- Financial strength of ownership
- General economic conditions & expectations
- Type & size of building
- Number of jobs created
- Wages paid
Considering all factors, loan approval, terms and rates are determined at the sole discretion of the Hutchinson EDA.
Please call the Hutchinson Economic Development Authority at (320) 234-4223 if you have any questions or need additional information.