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Minnesota Small Business Loans

The state of Minnesota offers a broad range of small business loans, grants, and other forms of assistance from multiple organizations, including banks, credit unions, online lenders, and more. With the right Minnesota small business loan or grant, you will surely turn your business goals into realities.

Written by Tetiana Sitiugina-Babiuk - Independent writer and content strategist, updated on 11/10/2021

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. Prairieland Economic Development Corporation

The Prairieland Economic Development Corporation is a certified development company (CDC) that has been offering financing and small business loans to Minnesota-based businesses since 1983. The main goals of the company include increasing entrepreneurship and employment within the state, expanding the small business sector, and improving community relationships and services.

With the Prairieland Economic Development Corporation, small business owners can apply for SBA 504 loans or direct loans. The revolving loan program is intended to help small businesses in rural parts of Minnesota to receive non-traditional financial assistance, mainly through the USDA’s Rural Development Intermediary Relending Program.

2. Minnesota Business Finance Corporation

The Minnesota Business Finance Corporation is a certified development company that works along with conventional financial companies and lenders in assisting small businesses to secure funds. The loans typically offered through the corporation are the 504 Loans that provide long-term financing for small businesses.

As such, the SBA 504 Loan can go up to $5 million with an interest rate of about 5% to 6% for the CDC portion. This type of loan can be used to finance the acquiring or purchasing of fixed assets, real estate, and equipment. To issue the loan, the bank, the SBA-approved CDC (which, in this case, is the Minnesota Business Finance Corporation), and the loan borrower are involved in the process.

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.

Summary of Top 3 Minnesota Small Business Loan Providers

Loan Provider

Features

Loan amount

Interest Rates

Repayment Period

The Prairieland Economic Development Corporation

Offers direct loans and SBA 504 Loans for Minnesota-based small businesses

  • Up to $250,000 for direct loans
  • Up to 90% of project’s cost for SBA 504 loans
  • Fixed rates at 4% to 7% for direct loans
  • Below market, fixed rates for SBA 504 Loans
  • 3 to 15 years for direct loans
  • 10 years for SBA 504 Loans on machinery and equipment
  • 20 to 25 years for SBA 504 Loans on real estate and buildings

Minnesota Business Finance Corporation

Offers SBA 504 loans to finance purchasing or acquiring real estate, fixed assets, and equipment

  • Up to $5 million
  • 5% to 6%
  • 10 to 25 years

North Star Bank

Provides short-term and long-term small business loans and letters or credit

  • Depends on the program
  • Depends on the program
  • Both short- and long-term loans 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 - Best for Invoice Factoring

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%.

BlueVine Pros and Cons

Pros

Cons

  • 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%
  • Interest rates can get expensive
  • Short repayment term
  • Personal guarantee is required
  • Leans are only available to business-to-business companies
  • Line of credit has a draw fee

2. Fundera - Best for Startup Loans

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.

Fundera Pros and Cons

Pros

Cons

  • 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
  • Not a direct lender
  • It can take up to three weeks for funds to be disbursed
  • Additional fees may apply

3. Fundbox - Best for Lines of Credit

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%.

Fundbox Pros and Cons

Pros

Cons

  • 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
  • Interest rates can be high
  • Repayments are required frequent
  • It can be difficult to meet borrower qualifications

Summary 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

In addition to the online lenders and commercial loan programs described above, Minnesota provides additional financial assistance to local entrepreneurs in the form of small business grants and support from nonprofit organizations. Below, you will find resources that offer additional assistance for Minnesota-based businesses.

  • Metropolitan Economic Development Association (MEDA): is a nonprofit organization that aims to empower Minnesota’s minority entrepreneurs. In addition to financial resources, the association provides access to business consulting and market opportunities for small business owners.
  • Neighborhood Development Center, Inc.: is a community-based nonprofit organization that aims to support emerging entrepreneurs and help them grow successful businesses. The organization invests primarily in low-income neighborhoods in greater Minnesota and the Greater MSP region. 
  • Connect2Capital: is a mission-driven lender powered by Community Reinvestment Fund (CRF), a nonprofit community development financial institution. CRF aims to bring capital to underserved communities and people in order to stimulate economic development and job creation.
  • SPEDCO: is a nonprofit certified development organization dedicated to assisting small businesses in Minnesota in obtaining financing for business expansion and job creation. The company provides long-term, fixed-rate loans through the 7(a) loan and SBA 504 Loan packaging consulting services to banks and their clients.

Other Resources for Minnesota Small Businesses

The chances of small businesses not being able to receive help continue to grow less every day. In addition to providing financial assistance, numerous organizations and companies support Minnesota-based businesses by offering services like business planning, financial analysis, loan packaging, marketing and technology, and more.

1. 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 40 years 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.

2. Minnesota Small Business Development Centers

The Minnesota chapter of Small Business Development Centers (SBDC) aims to provide professional guidance and expertise required for small business owners to flourish in today’s ever-changing business world.

Small Business Development Centers offer:

  • Pre-venture business services. If you have a business concept in mind but aren’t sure where to start, you can contact  SBDC for assistance in developing a sound business plan.
  • Start-up business services. SBDC also offers services for recently-launched small businesses that require extra guidance and assistance in tweaking the business strategy and navigating the competitive business environment.
  • Established business services. If you are ready to expand your business and need professional guidance, professional consultants at SBDC can help you to make the right strategic decisions.

3. Association of Procurement Technical Assistance Centers

Procurement Technical Assistance Centers (PTACs) form a nationwide network of procurement specialists dedicated to helping small businesses compete in the government marketplace. If you are looking for government contracting help, you can contact PTAC for help with:

  • Securing necessary registrations. Your local PTAC can help you to ensure that you are registered in the numerous databases required for you to participate in the government marketplace.
  • Determining suitability for contracting. A PTAC advisor can help you determine whether your company is suitable for specific government contracting opportunities.
  • Marketing. The organization also provides assistance in identifying which individuals and offices are most likely to need your products and how you can connect with them.
  • Additional services. Specialists at PTAC can also help you to apply and secure special certifications, identify bid opportunities, prepare proposals, resolve contract performance issues, and more.

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.

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.