Minnesota Administrative Rules
Agency 107 - Agricultural and Economic Development Board
Chapter 1589 - SMALL BUSINESS DEVELOPMENT LOAN PROGRAM
Part 1589.0300 - ELIGIBLE LOANS FOR SMALL BUSINESS DEVELOPMENT LOAN PROGRAM
Current through Register Vol. 48, No. 39, March 25, 2024
Subpart 1. In general.
The board shall make small business loans to applicants in compliance with the act and parts 4305.1000 to 4305.1200 and 4307.0100 to 4307.0500 in order to help create or retain jobs for the state.
Subp. 2. Purpose of loan.
A small business loan must be used to provide interim or long term financing for certain capital expenditures as provided in the act, and for expenditures that meet the requirements of federal industrial development bond laws, including:
Working capital loans are not eligible for financial assistance under this loan program.
Subp. 3. Size of eligible loans.
The principal amount of any financial assistance in the form of bonds to be financed by the board may not be less than $250,000, unless the applicant agrees to pay all bond issuance costs, and may not exceed the maximum amount permitted to be loaned to an eligible small business as defined in the act for the total value of eligible items listed in subpart 2.
Subp. 4. Equity requirements.
The maximum amount of a loan for project equipment is 75 percent of the cost of the equipment, and for all other authorized project expenses is 80 percent of the cost. The applicant must contribute at least 25 percent of the cost of project equipment and at least 20 percent of all other costs. Instead of a cash equity contribution the board shall accept collateral which, if contributed to the financial assistance, would make the maximum loan percentage of the project costs for equipment equal to 75 percent and for all other authorized expenses equal 80 percent. The board may require a lower loan to project percentage based upon the economic feasibility of the application. The board may accept letters of credit or other credit enhancements as part of the equity contribution by the applicant.
Subp. 5. Maximum term.
The maximum term of a small business development loan may not exceed the average useful life of the real property, or 80 percent of the useful life of the equipment or machinery, or the following limits, whichever is less:
Subp. 6. Interest rate.
The board shall set interest rates at a negotiated rate that approximates the market rate of interest for securities of equivalent value at the time the bonds are initially sold.
Subp. 7. Security requirements.
Financial assistance, either for real property or equipment, may be secured only with the best available security including one or more of the following:
Statutory Authority: MS s 41A.04