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Minnesota Small Business Loans

Getting financial assistance has become a simple, straightforward process, making it easier for small businesses to succeed. Small business loans in Minnesota have been designed to be suitable for a wide range of business types. They are also ideal for business owners in-need of assistance.

At a glance The average small business loan in Minnesota ranges up to $2 million. This makes it one of the best states to get a business loan, with 503,055 small existing businesses in the state. There are plenty of financial companies in Minnesota that can help your small businesses grow from the ground up. On this page, we explore the financing options in Minnesota.

Top Minnesota Small Business Loan Options 

There are various Minnesota small business loan options offered by banks and various organizations. Every small business has the opportunity to receive financial relief. 

Some Minnesota small business loan options are described below.

1. Small Business Administration (SBA) Loans

Banks have been a striving trusted loan service for years, which is why some banks have created dedicated commercial bankers. 

The Small Business Administration offers loans financed through Merchants Bank. The loan programs are:

  • Microloan program - These are short-term small amount business loans.
  • 7(a) loan program  - The 7(a) loan program is suitable for starting businesses, business acquisitions, and the expansion of small businesses. It’s the most common small business loan program. It has also been the to-go loan program for years for small business entrepreneurs.
  • Disaster loans - Most businesses face problems and unexpected challenges as they grow. Disaster loans aid in small business repairs and replacement of items due to a disaster. These loans also help rebuild small businesses and offer economic relief with small interest payments. 

Currently, small businesses affected by the coronavirus pandemic have the opportunity to apply for loans up to $2 million if they’re eligible. Others can also receive within three days cash of up to $10,000 for vital business obligations.

2. Minnesota Business Finance Corporation

The Minnesota Business Finance Corporation is a certified development company. This means it works along with conventional financial companies and lenders in assisting with securing funds for small businesses.

To earn a business loan from the Minnesota Business Finance Corporation, there are some steps to be followed. You go through the process of getting your loan plan evaluated and analyzed. The decision for your eligibility is concluded within a few days of submitting your application. The loans typically offered are the 504 Loans that provide long-term financing for small businesses.

The SBA 504 loan is used to finance the acquiring or purchasing of fixed assets, real estate, and equipment. To issue the loan, the bank, the SBA-approved certified development company (which in this case is the Minnesota Business Finance Corporation), and the loan borrower are involved in the process. 

The general 504 loan amount ranges up to $5 million with an interest rate of about 5% to 6% for the CDC portion. The eligibility of this loan depends on what the loan borrower wants to acquire. It could be major fixed assets like building, land, machinery, and equipment. This is why it’s equated to SBA commercial real estate loans.

3. North Star Bank

North Star Bank is one of the most flexible Minnesota small business loan providers. It’s also a local supporter for striving and startup small businesses.

The bank offers a variety of Small Business Administration loans. The loans depend majorly on the business age, the credibility, the impact your business has, and lastly the sole purpose of your loan.

To suit a wide range of loan-seeking businesses, North Star Bank offers more short-term and long-term small business loans and letters of credit. For businesses that aren’t yet sure of what loan is most suitable for them, North Star Bank is the to-go place. They have large financial options available.

Top Online Minnesota Small Business Loan Options 

The one thing that we have learned from the coronavirus pandemic is that technology has endless possibilities for growth. Almost everything is available online as well as being able to get your online loan application evaluated online within a short period.

In a time where everything is fast-paced and digital, the importance of online loans continues to grow. Small businesses are now able to obtain financial assistance without too much hassle and without having to visit a lot of places. 

Examples of companies offering online loans are listed below.

1. BlueVine

A loan application on BlueVine takes less than 10 minutes to process and submit. Within a short time, your eligibility is evaluated and your loan is processed. The most common loan type is invoice factoring. This loan type is best for short-term bridge financing with an estimated annual percentage rate of between 0.25% and 25%.

Benefits

  • Quick online application
  • The answer to your request is received within 24 hours
  • You won’t need to provide surety
  • The maximum amount is $ 5,000,000
  • You can receive an invoice value upfront of 85% to 90%

2. Fundera

Fundera has systems that help businesses prioritize their income and expenses. It’s an all-in-one platform that includes payment systems, loans, and accounting software. Fundera has a variety of financial options to suit the needs of different small businesses. The most common types of loans are startup, working capital, and equipment acquisitions, and it’s good for emergency loans and long-term planning. The estimated annual percentage rate varies.

Benefits

  • You get small business loan rates from a wide range of lenders
  • It’s packaged with a full suite of financial services and advice
  • There are multiple integrations

3. Fundbox

Fundbox has a user-friendly and transparent loan lending process. You can do an online application and acquire about $150,000 instantly. The most common loan is the line of credit that is provided to all business owners. It’s suitable for long-term planning and emergency expenses with an estimated animal percentage rate of 4.66% to 8.99%.

Benefits

  • The online applications are fast and easy 
  • A low credit score is acceptable
  • Once they approve, you can reapply for new credit effortlessly
  • With pre approved credit, you can receive up to $150,000 to use as you see fit in your business

Summary Table of Companies Offering Online Loans in Minnesota

Company

Summary (Pros)

BlueVine

  • Customer support is available whenever needed
  • Your BueVine account comes with unlimited transactions unlike the majority of business checking accounts
  • Payment to your vendors can be made by wire, ACH, or check
  • The maximum amount is $5,000,000
  • You can receive an invoice value upfront of 85% to 90%

Fundera

  • Loan interest rates are low and depend on the creditworthiness and the qualifications you bring to the table
  • It’s packaged with a full suite of financial services and advice
  • There’s high and flexible capital availability
  • Long repayment terms help not put a financial strain on you and your business

Fundbox

  • The online applications are fast and easy
  • There’s no requirement for a minimum credit score.
  • A business line of credit is offered and you can borrow money recurrently
  • With pre-approved credit, you can receive up to $150,000 to use as you see fit in your business

Additional Minnesota Small Business Financial Resources

The Small Business Administration offers the state of Minnesota small businesses microloans and a variety of funding programs. 

The local government and state offer financial funding assistance as well. Small businesses have to keep up with what's new by keeping in touch with their municipality and assigned small business assisting offices. This will prevent any small business from facing termination threats due to not knowing where to go next or delayed financial assistance. 

For more small business financial relief, the town of Minnesota has systems like the following:

  • Community development financial institutions
  • Certified development companies
  • Minority depository institutions
  • Microloan intermediaries

These systems can loan to small businesses directly and help them navigate through any problems that they might be facing. 

With cases like the coronavirus pandemic, small businesses are facing an unpredictable economic flow. With the assistance of loan funding, they have something to fall back on and keep their businesses running. 

Other Resources for Minnesota Small Businesses

At no cost, the Small Business Administration has resource partners that assist Minnesota small businesses. This could be with technical support and assistance, consulting, and mentorship. 

An example of an existing partner is SCORE. SCORE  is a nonprofit organization that is dedicated to mentoring small business owners and helping small businesses start and grow. It has existed for more than 40years and has assisted a variety of small businesses. Examples are Lonesome Cottage furniture company and Arctic Compressor. 

SCORE offers:

  • Remote small business & entrepreneur mentoring sessions
  • Free consultation with business professionals
  • Local workshops and events to assist small business owners 
  • Resources and webinars

Following your business needs, assistance is customized to suit you. You’re also assisted with strategies to help your business start and grow in the long run.

There are more organizations and companies like the Minnesota Small Business Development Centers, Government Contracting Assistance, and more that also focus on assisting and supporting already existing and growing businesses.

They offer services in the form of business planning, financial analysis, loan packaging, marketing and technology, and more customized business needs. The chances of small businesses not being able to receive help continue to grow less every day. More opportunities for assistance in different business aspects grow in availability.

How to Prepare for a Minnesota Small Business Loan

To increase the chances of having your small business loan request approved, you can prepare a loan proposal and a business plan. The loan proposal acts as evidence of business experience and management and an understanding of the marketplace and business operations.

  • Credit History - Before you start your loan application process you’ll collect your credit history. You’ll have to confirm that your credit history is accurate. You can contact credit reporting agencies for any inaccuracy in your credit history. Your credit history will help lenders determine your ability to repay the loan. Lenders typically order a copy of your business and personal credit reports from either Experian, Equifax, or TransUnion. 
  • Loan Proposal - Your loan proposal should consist of certain major factors. The factors are: how much money you need, how the loan will be used in your business, the strategy of paying the loan, and what the plan is in case your business can’t manage to pay the loan back. For a loan format, you can contact the lender on what type of format they prefer.

Your loan proposal can include elements like executive summary, business profile, management experience, loan request, loan repayment, collateral, personal financial statements, business financial statements, equity investment, projections, and other items if applicable.

Bottom Line

Getting a small business loan in Minnesota has become relatively easy. There are a variety of organizations and offices to assist entrepreneurs in how to prepare for a Minnesota small business loan. Loans have been designed to suit a wide range of business owners. With online loans now available and attainable in just a few minutes, nothing is stopping you from receiving your financial relief. 

Contacting your bank and your potential lender can be the best first step to acquiring your loan.