Funding Opportunities for Businesses and Entrepreneurs
SRDC administers several funding opportunities for businesses and entrepreneurs in Southwest Minnesota. Financing from the SRDC makes projects possible when gap financing or up-front funds are not available. Two primary funding opportunities include the SRDC Revolving Loan Fund (RLF) and Property Assessed Clean Energy (PACE).
Revolving Loan Fund Project Highlights
186
Businesses Assisted
$400,000
FY23 RLF Administered by:
Falcon Development Commission $25,000
Jackson County RLF $300,000
Heron Lake RLF $75,000
$318,000
RLF funds loaned in FY23
Traditional RLF - $75,000
C-RLF - $243,000
$11,707,499.84
Total RLF funds loaned since 1995
$83,070,527.93
Total leveraged Funds since 1995
RLF: Enabling Businesses to Expand or Sustain
SRDC’s Revolving Loan fund is designed to provide gap financing for new or existing businesses in the nine-county region with fixed asset and working capital financing. The fund is designed to bridge the gap between owner financing and private lender financing. This program supports business initiatives that create or retain jobs.
The primary use of RLF funding are real estate, machinery and/or equipment, fixed assets, and working capital financing.
One full-time equivalent job, created or retained, is preferred for every $20,000 of loan proceeds from the RLF. Loan amount cannot exceed 50% of total project costs.
Loans may range in size from $5,000 to $100,000 but must be matched by another financing source on a 1:1 basis. Applicants must show that they cannot leverage affordable financing from any other means.
Interest rates are as low as 75% of Prime Interest Rate with loan repayment typically 5-7 years for working capital or 7-15 years for machinery, equipment, and real estate. Balloons may be required.
An origination fee of 1% or 1.5% of loan proceeds, dependent on project, is required. Closing legal costs and filing fees are the responsibility of the Borrower. The RLF most often is subordinate to private bank financing. Personal guarantees and collateral of life insurance are typically required. Other terms may apply.
Applications are accepted on a year-round basis. The Revolving Loan Fund Committee meets as needed to consider loan requests. View the RLF Checklist and RLF Application to get started.
PACE: Improving Businesses’ Energy Efficiency
Through partnership with the Rural Minnesota Energy Board, SRDC administers the Property Assessed Clean Energy program which assists property owners with financing improvements that substantially increase energy efficiency. PACE allows businesses to make these fixture improvements without the up-front capital outlay. Costs for the improvements are paid back through a special assessment on their taxes. The increase in property taxes is offset by the decrease in energy costs so that the business sees no change in the bottom line.
Commercial, industrial, and agri-business properties are eligible to apply. Housing and non-profits may be eligible, depending on use. Businesses must be located in the member counties of the Rural Minnesota Energy Board: Blue Earth, Brown, Cottonwood, Faribault, Freeborn, Jackson, Lincoln, Lyon, Martin, Mower, Murray, Nicollet, Nobles, Pipestone, Redwood, Renville, Rock, and Watonwan County.
The primary use of PACE funds are for improvements listed within the energy audit that document substantial energy savings. Projects may include, but are not limited to heating, cooling, insulation, refrigeration, or lighting. Renewable energy projects such as wind, solar, and geo-thermal are also eligible.
Loans may range in size from $5,000 to $100,000; however, loans cannot exceed 30% of the property assessed value. PACE can be the sole financing source or can be a part of a larger financing package.
Interest rates are fixed and 3% under Prime. The amortization schedule is determined based on cost savings identified within the energy audit. Preferred loan repayment is 10 years or less. An origination fee of 1% of loan proceeds is required, along with any applicable registry taxes and recording fees. Other terms apply. See application for full details.
Applications are accepted on a year-round basis. The PACE Committee meets as needed to consider loan requests. View the PACE Application or check the RMEB website to learn more and get started.
Contracted RLFs
Through partnership and collaboration with communities and counties, SRDC administers three RLFs specific to community areas within the region.
Falcon Development Corporation
Falcon Development Corporation (FDC)’s Revolving Loan Fund provides financing assistance to new and/or existing businesses, and/or retention of significant jobs with viable plans for making improvements, locating, or expanding in the City of Heron Lake and the surrounding area. FDC’s purpose is to advance the economic development prosperity of the area by promoting and encouraging trade and commerce. Any loan made to a business must add new wealth, growth, and betterment to the area. The revolving loan fund may also be used to provide financing for community development and infrastructure improvements that would promote economic development in the area, including the stimulation of growth through improved manufacturing or new technologies.
Retail/service, manufacturing, agribusiness, healthcare, alternative and renewable energy, environmental, technology-based, and distribution businesses. Eligible businesses may be for profit, non-profit, and under some circumstances, local units of government.
Applicants must show that affordable financing cannot be leverage with other resources. The revolving loan fund must be matched on a 1:1 basis by a bank or other non-federal source. Loans may range from $10,000-$100,000, with interest rates as low as 75% of prime.
Fees: 1% of proceeds at closing, closing fees, legal costs and filing fees.
Applications are accepted on a year-round basis. Please review the Checklist for Application for more information.
Jackson County RLF
Provides financing assistance to new and/or existing businesses, and/or retention of significant jobs for businesses in Jackson County, Minnesota.
For questions regarding Jackson County’s RLF or for application materials, contact SRDC Deputy Director Robin Weis.
Heron Lake RLF
Provides financing assistance to new and/or existing businesses, and/or retention of significant jobs for businesses within a 20-mile radius of the City of Heron Lake, Minnesota.
For questions regarding Heron Lake’s RLF or for application materials, contact SRDC Deputy Director Robin Weis.
SRDC is here to help strengthen your community!
SRDC offers a vast list of services to assist with your needs. Contact us if you are interested in working with SRDC on your project.