Meeker County Development Corporation answers the question as to why “Meeker County is the Perfect Setting.” MCDC offers direct assistance and connections to make your business relocation, expansion or start up a success.
The Loan Programs offered by MCDC provide “gap financing” to businesses showing a financing need due to:
- Inadequate private lender financing.
- Inadequate equity by the owners of the business.
- Inability to pay market interest rates or term requirements.
This “gap financing” supplements the dollars provided by financial institutions and investors and strengthens financial packages. Financing is intended to compliment, not compete, with traditional financing sources. MCDC will not participate in a project that can be solely financed through traditional sources.
Applicants are encouraged to call or visit MCDC at an early stage in project development to discuss the feasibility of support for their projects. MCDC will endeavor to provide an indication of the project’s eligibility and to suggest factors which should be considered to maximize the potential for developing a viable proposal.
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Local Loan Programs
Revolving Loan Fund
Intermediary Relending Program |
| Loan Interest and Terms: |
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- Loans from MCDC will not exceed 50% of the total project costs
- The maximum loan amount from MCDC will not exceed $75,000
- The interest rate will be fixed through the term of the loan, to be determined at the time of application.
- The loan amortization will match the tax depreciable life of the asset being financed with the MCDC loan proceeds. Generally, loan maturities will be five years.
- The MCDC Loan Programs will be collateralized.
- Project Structure:
- 10%-25% Equity (Expansion)
- 25% Equity minimally for new/start up
- 25%-50% Financial Institution
- 25%-50% MCDC Loan Funds
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| Eligible Businesses: |
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May be either start-ups, relocation or expansion projects. The types of businesses include, but are not limited to, those engaged in:
- Most for profit businesses that provide employment opportunities, including tourist and recreational facilities
- Technologically innovative industries
- Value added manufacturing
- Businesses within economic asset sectors for the region such as; renewable energy projects and food production sectors
- Business growth that leads to greater individual and community prosperity
- Businesses whose markets extend beyond the region
- Dairy modernization (RLF only)
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| Eligible Uses of Loan Funds: |
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All costs demonstrated as essential for the project, including working capital and/or assets (land, building, machinery and equipment). |
| Business Planning: |
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A business must have some expertise in or should have assistance with product development, marketing and management. If assistance is needed, applicants can find support from available business development professionals such as the state’s business finance specialist, regional development commission staff, community development personnel, or small business development consultants. Contact MCDC if you are unsure about how to access these resources. |
| Private Investment: |
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An approved loan from MCDC must be matched by at least an equal or greater amount of new private funds invested or loaned to the company. To serve as a bona fide match, these private funds cannot be existing debt or equity dollars from prior financing. These dollars include a combination of equity and private lender financing. |
| Job Creation: |
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As a general requirement, MCDC prefers that one job be created for every $10,000 of its loan proceeds. The jobs should principally benefit low-income people by providing full-time employment for them.
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| Minnesota Community Capital Fund |
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The Minnesota Community Capital Fund (MCCF) is a rural economic development initiative that was designed to increase the availability of gap-financing capital to rural communities. Eligibility for MCCF funds require a membership by the community or county for which the project is to be completed. Members from Meeker County include:
- Meeker County
- Meeker County Development Corporation
- City of Litchfield
- Litchfield Industries
- City of Eden Valley
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| Eligibility and Loan Criteria |
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MCCF can accept subordinated loans ranging from $50,000 to $2,500,000 in support of affordable housing and business development projects throughout the areas served by MCCF members. The Borrower may be a for-profit business entity, non-profit entity, cooperative, or a local unit of government. A financial institution must be a participant in the project financing.
MCCF financing assistance may include, but is not limited to: fixed assets, including land and building purchase, building construction, leasehold improvements and renovations; acquisition, renovation or moving machinery and equipment; and working capital loans secured by fixed assets with fixed repayment schedules (not lines of credit). Loans may not be used to refinance existing debt.
Loan terms will be determined on a case-by-case basis, with the primary factor being the collateral offered. Loans secured by real estate will generally not exceed 20 years, and loans secured by machinery and equipment will generally support a loan term of up to 10 years, not to exceed the depreciated life of the asset being financed. When possible the MCCF loan will coincide with the term of the participating bank loan.
Application or more information about the Minnesota Community Capital Fund can be arranged through the MCDC office at 320-693-5272 or at www.mncommunitycapitalfund.org.
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| Minnesota Investment Fund |
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The Minnesota Investment Fund (MIF) administered through the Minnesota Department of Employment and Economic Development, can provide up to $500,000 for companies creating, adding and retaining high quality jobs in Minnesota.
MIF focuses on industrial, manufacturing and technology related industries. Criteria used in determination of approval include, but are not limited to, capital investment; number of jobs created or retained over a two year period; and wages paid.
A local unit of government in which the business is locating or expanding collaborates with the company in applying to the state for Minnesota Investment Fund financing. The funds are then granted to the local unit of government for lending to the business.
Maximum loan amount is $500,000. Only one grant per state fiscal year will be awarded to a governmental unit. At least 50 percent of total project costs must be privately financed through owner equity and other lending sources. Loan terms are for a maximum of 20 years for real estate and 10 years for machinery and equipment. Interest rates are fixed through the term of the loan and negotiated at the time of application.
More information about the Minnesota Investment Fund is available through the MCDC office at 320-693-5272 or at www.positivelymn.com/bizdev/InvFd/ |
| Other Assistance: |
Job Opportunity Building Zones (JOBZ)
Available in Litchfield, Dassel and Cosmos |
| Zone Characteristics |
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Creation of these zones is for a maximum duration of 12 years
beginning January 1, 2004 through December 31, 2015. Each JOBZ includes acres for primarily industrial, value-added, or high paying service businesses. |
| Type of Tax Exemptions |
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Corporate franchise tax; income tax for operators or investors, including capital gains tax, sales tax on goods and services used in the zone if the goods and services were purchased during the duration of the zone; property tax on commercial and industrial improvements but not on land; wind energy production tax, and; employment tax credit for high paying jobs.
Exemption does not apply to the following property: Property subject to a general obligation bond levy; Property subject to a school operating referenda approved by the voters before designation of the JOBZ or APFZ; Land only (improvements to land are exempt); Property where neither the owner or lessee is a qualified business (see eligible property/business section for qualified business definition). |
| Eligible Property/Business |
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Tax exemptions apply only to qualified businesses. Qualified businesses include: businesses in the Zone at the time of designation, business startups in the Zone, business relocations from other states, and business relocations from Minnesota if the business increases employment by 20% of their existing workforce, or a minimum of 5 jobs, whichever is greater within the first full year of operations in the Zone.
Businesses will become qualified for JOBZ through the execution of a local Business Subsidy Agreement. The agreement will specify performance requirements such as number of jobs to be created, wages and benefits paid, and capital investment. Retail development is not eligible for JOBZ benefits. |
Contact Suzanne Hedtke, Director Meeker County Development or go to http://www.positivelymn.com/bizdev/jobz.htm. Included on this website is a calculator you may use to determine the total JOBZ benefit for your company. It also has a list of frequently asked questions you may find helpful. |
| TIF/Tax Abatement |
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| Tax Increment Financing |
These resources provide an example of programs available for businesses. The final decision to apply these programs to a project is determined by each individual community.
The Minnesota State Legislature has created Tax Increment Financing as a locally controlled source of financing. Tax Increment Financing can be used for the following purposes:
- Land and building acquisition.
- Demolition and clearance.
- Relocation costs.
- Public improvements (sewer, water, utilities).
- Soil corrections.
- Site preparation.
- Legal, engineering and administrative expenses.
- Bonding and capitalized interest.
- Project contingency.
Prohibitive costs of new public improvements can be reduced by dedicating property tax revenues for a specific number of years from a directly related development. Incremental tax revenues generated from a new project are for repayment of project costs falling in the above categories.
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