There are variety of financing options available for entrepreneurs and small business owners looking to start or expand businesses in Minneapolis. Before you start the process of raising or borrowing money, you'll need to determine startup costs and financial projections to estimate how much money you will need and how much you can afford. For assistance developing your financial plan or accessing funding sources, make an appointment with a business consultant through the City’s Business Technical Assistance Program (B-TAP).
SCORE Minneapolis provides a financial projection tool using an Excel workbook. It provides statements for the following below:
The Twin Cities has many nonprofit and community lenders, known as Community Development Financial Institutions, that are mission-driven and focused on serving entrepreneurs and small business owners who face barriers in obtaining loans or lines of credit from traditional banks. A CDFI may have fewer restrictions when making lending decisions and offer smaller loan amounts. Many CDFIs also provide technical assistance and business support programs.
Business loans from banks are one of the most traditional funding sources for small businesses. Due to stricter underwriting criteria, lending decisions from banks is largely based on credit scores and collateral. It is important to have a business plan when pursing a small business loans from banks since they will want to see that you have a profitable business idea. The Small Business Administration offers several loan programs for small businesses that are administered through national, local, and community banks. To learn about SBA lending programs and connect with an approved SBA lender, check out the SBA's Lender Match.
Using online platforms, peer-to-peer lending, or crowdfunding, is a financing model where multiple individuals pool their money to provide investments or low-interest loans to entrepreneurs and small business owners. Crowdfunding can be used to raise money from your family, friends, and individuals who are connected to the online lending platform. There are several B-TAP providers who can help you set-up a crowdfunding campaign.
The City of Minneapolis Community Planning and Economic Development (CPED) has developed a toolbox of financing programs designed to support small businesses located in Minneapolis. Most of these loan programs require that a private lender - such as a CDFI or bank - provide at least half of the loan amount before the City will provide the additional funding.
2% Loan Program
Provides financing to small businesses to make building improvements and/or to purchase certain equipment. A private lender provides at least half the loan and the City provides a match, up to $50,000 at 2% interest or up to $75,000 in designated neighborhood commercial districts.
Alternative Financing Program
Provides Islamic-compliant financing without interest to small businesses to make building improvements and/or to purchase certain equipment. A private lender provides at least half the financing at its rate of return, and the City provides a match, up to $50,000 at a 2 percent rate of return.
In collaboration with the Saint Paul Port Authority, small businesses and commercial properties can access financing for energy efficiency and renewable energy improvements.
Homegrown Small Business Fund
Provides financing to small food producers, manufacturers, growers and certain farmer's market vendors. The program provides financing for processing, manufacturing, and distribution costs, working capital costs and equipment. Up to $10,000 is available at a 2% interest rate.
Business Health and Safety Loan Program
Provides financing to small businesses to make minor improvements to achieve standard health and safety code requirements. This program offers loans up to $10,000 at an interest rate up to 7% for a term of 5 years or less.
Facade Improvement Matching Grant
Provides matching grants to small businesses and commercial properties located in eligible business districts to make exterior, facade improvements. Facade grants will pay for 50% of the total project costs, up to a maximum of $5,000 (or $7,500 in some areas). Grants can be used for improvements such as exterior painting, canopy or awning installation, murals, and installation of exterior signage.