1. Financing Firms: From Garages to Clean Rooms
Bob Isaacson, DEED
“Financing Firms – From Garages to Clean Rooms”
Explore the range of finance programs offered by the Minnesota Department of Employment and Economic Development and the opportunities for new businesses to tap into these finance opportunities. In particular, he will present the latest addition to the finance portfolio – the Minnesota Emerging Entrepreneur Loan Fund – and how this statewide program can assist businesses owned by women, minorities, vets, persons with disabilities and low-income individuals.
Bob Isaacson
Executive Director, Office of Business Finance

2. Yes…garages

3. To clean rooms

4. Well…maybe not all clean rooms

5. And (nearly) everything in between

6. Anywhere in Minnesota

7. Attract, retain and grow businesses
Program Purposes
Attract, retain and grow businesses
Create and retain jobs

8. A little about DEED… Economic Development Workforce Development
Business and Community Development
Trade Office
Broadband Office
Workforce Development
Unemployment Insurance
One of a few state that have merged DES and DTED
1,500…60 are ED
BCD – technical and financial services to help businesses and communities grow
Trade - provides the training and expertise that small and midsized companies need to export goods and services
Broadband - works to improve availability and use of high speed broadband services.
WD – variety of programs offered through WIOA and other state and federal programs to help job seekers
UI -

9. More about Economic Development
Technical Assistance
Small Business Assistance
Small Business Development Centers
Minnesota Trade Office
Minnesota First Stop
Location Assistance
Financial Assistance
Community Finance
Business Finance

10. Drilling down into Finance
Community Finance
Infrastructure, housing and redevelopment
Business Finance – 20 programs
Loans
Grants
Tax Credits/Refunds
$40 million annually
Key points:
We typically don’t enter into project without private funds leading the way
Generally matching private funds

11. Life Cycle

12. Most Active Programs Angel Tax Credit and Angel Loan Fund
Minnesota Investment Fund & Job Creation Fund
Greater Minnesota Job Expansion Program
Emerging Entrepreneur Loan Fund

13. Easy Strings Attached

14. Angel Programs Funding Tax credits for investors in early stage firms
No interest loans with no payments for 7 years
Eligibility
Proprietary technologies in limited industries
Age and investment requirements
Timing
Tax credits provided at time of investment
Loan provided following eligible investment

15. Angel Tax Credit

16. Angel Performance
26 target businesses received $12.2 million in investment
187 business certified/105 received investment
Angel Loans – 10 loans valued at $1.4 million
$59 million invested/$14.7 credits awarded
655 investors
certified/
555 invested

17. Angel Industries Business Industry Number Receiving Investment
Medical Device/Biotech 33
Software/Internet/IT 29
Consumer Products 10
Other 36
Total
105

18. Minnesota Investment Fund
Funding
Loan of up to $1,000,000; 50% of costs
Amount depends on capital investment, jobs and wages
Eligibility
Wage requirements
Footloose business – can serve same customers regardless of location city
Timing
Provided as grant to local government who reimburses projects as funds are expended

19. MIF Awards,

20. Recent MIF Examples
$19 million awarded program-wide in 2016 helping to create/retain 2,500 jobs

21. Job Creation Fund Funding Cap Ex and Job grant of up to $1,000,000;
Amount depends on scoring which includes capital investment, jobs and wages
Eligibility
Wage and job requirements
Footloose business – can serve same customers regardless of location city
Timing
Provided as grant to once 10 FT jobs have been in place for a year $500K has been spent

22. JCF Awards,

23. Recent JCF Examples In 2016: Program awarded $10 million
1,400 new jobs
$246 million leverage

24. Gtr MN Job Expansion Funding Sales tax refund for any sales tax paid
Amount depends on scoring which includes capital investment, jobs and wages
Up to $2 million per year; $10 million total
Eligibility
2 FTE or 10% increase whichever is greater
Wage
Footloose business – can serve same customers regardless of location city
Timing
Provided as an annual grant

25. Emerging Entrepreneur Loans
Funding
Up to $150K + private match
Under $35K, no match needed
Eligibility
Business owned by women, people of color, vets, low-income individuals and persons with disabilities
Low-income areas highest priority; Gtr MN considered low-income
Timing
Work through non-profit lender; funds provided once loan approved

26. ELP – One Equity Program
Emerging Entrepreneur Loan Program (ELP) one of several provisions in 2016 equity legislation
$35 million of which $857,000 committed for ELP
Future base proposed to be $750,000 annually but expect less given current legislature proposals
Replaces Urban Initiative Loan Program

27. ELP Awards $2 million awarded 23 lenders Funds from two sources:
$857,000 - Legislative appropriation
$1.143 million in Urban Initiative repayments

28. ELP Eligible Lenders African Development Center (ADC)
African Economic Development Solutions (AEDS)
Central Minnesota Development Company (CMDC)
Community and Economic Development Associates (CEDA)
Entrepreneur Fund
First Children's Finance
4-Directions Development Inc.
Greater Bemidji Inc.
Hmong American Partnership (HAP)
Immigrant Development Center
Initiative Foundation
Latino Economic Development Corporation (LEDC)
Metropolitan Consortium of Community Developers (MCCD)
Metropolitan Economic Development Association (MEDA)
Neighborhood Development Center (NDC)
North Central Economic Development Association (NCEDA)
Northland Foundation
Northside Economic Opportunities Network (NEON)
Northwest Minnesota Foundation
Southern Minnesota Initiative Foundation
Southwest Initiative Foundation
WomenVenture
Worthington Regional Economic Development Corporation (WREDC)
Cover the entire states…few spots without regional lenders

29. ELP Loan Geography Greater Minnesota and 7-county Twin Cities
$500,000
Aim for 50/50 split
Twin Cities
$357,000
50% - Dakota, Ramsey and Washington
50% - Anoka, Carver, Hennepin and Scott

30. Emerging Entrepreneur Fund
Emerging Entrepreneur Funds Loans,

31. Documentation Project review Financial analysis Credit analysis
Application
Review application
Due diligence
Award
Award funding
Prepare legal documents
Disburse
Funds provided
Monitor
Project review
Financial analysis
Credit analysis
But for

32. Other Popular Lending Options
SBA and USDA
Loans
Loan guarantees
Intermediary lending
Nonprofit lenders
CDFI
CDC
SBA – 504 loan or 7a guarantee
USDA – variety of programs – business and industry loan guarantee (B&I Guarantee), loan programs for start-ups and industry-focused assistance for renewable energy facilities
CDFI - A community development financial institution is a financial institution that provides credit and financial services to underserved markets and populations. CDFIs are certified by the Community Development Financial Institutions Fund (CDFI Fund) at the U.S. Department of the Treasury. Federal dollars seed the organization
CDC – community development corporation are community-based organizations working on social services, housing and economic development
If certified, is a CDC that is regulated and certified by SBA to provide SBA financing

33. Partners Help Bridge the Gap
Partnerships are key – cities, lenders, EDAs, etc.

34. DEED – Filling the Gap Bob Isaacson Executive Director,
Office of Business Finance
SBA – 504 loan or 7a guarantee
USDA – variety of programs – business and industry loan guarantee (B&I Guarantee), loan programs for start-ups and industry-focused assistance for renewable energy facilities
CDFI - A community development financial institution is a financial institution that provides credit and financial services to underserved markets and populations. CDFIs are certified by the Community Development Financial Institutions Fund (CDFI Fund) at the U.S. Department of the Treasury. Federal dollars seed the organization
CDC – community development corporation are community-based organizations working on social services, housing and economic development
If certified, is a CDC that is regulated and certified by SBA to provide SBA financing