Emerging Entrepreneur Loan Program (EELP)

Emerging Entrepreneur Loan Program (EELP) is sponsored by RAEDI Foundation. Provides loan capital for businesses owned and operated by BIPOC, low-income individuals, women, veterans, and persons with disabilities in Southeast Minnesota.

Emerging Entrepreneur Loan Program - Rochester Area Economic Development, Inc. | Small Business Development Emerging Entrepreneur Loan Program The Minnesota Emerging Entrepreneur Loan Program provides loan capital for businesses that are owned and operated by BIPOC (Black, Indigenous, Persons of Color), low-income persons, women, veterans, and/or persons with disabilities.

The program has additional goals of providing jobs for BIPOC and/or low-income persons, creating and strengthening BIPOC business enterprises, and promoting economic development in low-income areas. The Minnesota Emerging Entrepreneur Loan Program provides loan capital for businesses that are owned and operated by BIPOC (Black, Indigenous, Persons of Color), low-income persons, women, veterans, and/or persons with disabilities.

The program has additional goals of providing jobs for BIPOC and/or low-income persons, creating and strengthening BIPOC business enterprises, and promoting economic development in low-income areas. EELP loans can be issued to “micro-enterprise” businesses in southeast Minnesota owned by BIPOC or low-income persons, women, veterans, or persons with disabilities for a minimum of $5,000 and a maximum of $50,000.

Micro-enterprises are small, beginning businesses that have fewer than five total employees and have been generating revenue for less than two years. For older and/or larger businesses, loans are available up to $100,000, and require 1:1 matching funds. Businesses eligible for loans include, but are not limited to, technologically innovative industries, value-added manufacturing, and information industries.

Retail businesses are only eligible if they are micro-enterprises. Structures: traditional financing with interest rate or profit-based financing (borrower prohibitions on interest, e.g. Sharia law). “RAEDI will charge up to the maximum allowable interest rate permitted by DEED at the time of the loan origination (currently 10% maximum).

” Term: 3 – 5 years, depending on the project Guidelines for the EELP are available in Somali , Arabic , Khmer , Spanish , and Vietnamese . Need help putting together a business plan or financials? Get confidential help for free from the Small Business Development Center !

This program is funded by the State of Minnesota and the Minnesota Department of Employment and Economic Development .

In order to qualify for a loan under the Minnesota Emerging Entrepreneur Loan Program (EELP) under RAEDI, businesses must be based in southeast Minnesota (Twin Cities businesses are not eligible), and majority-owned and operated by one or more Minnesota residents who are BIPOC, low-income persons, women, veterans, and/or persons with disabilities.

If you are located outside of southeast Minnesota, you can find an ELP lender for your area here . The loan can finance a variety of startup and expansion costs, including normal expenses such as machinery and equipment, inventory and receivables, working capital, new construction, renovation, and site acquisition. Financing of existing debt is not permitted.

Please submit only one application per business . An eligible business may receive at most one loan under this program, which can cover multiple projects. A business owner may not receive loans for multiple businesses for which they have an ownership share of 20% or more.

NOTE: A personal credit check will be run as part of the application process for informational purposes, but will NOT be used to determine eligibility for a loan. NOTE: All applicants will be interviewed by RAEDI staff to determine eligibility (translators are welcome to participate, if needed).

To complete your application, you will need the following documentation: Financial Projections for three years ( template available here, if needed ) Copy of Business Tax Returns for last three years, as available Copy of Personal Tax Returns for last three years of owners – both Federal and State Year-to-date Income and Expense Statement, and Balance Sheet (for existing businesses) Personal Financial Statements of all owners who own 25% or more of company ( template available here ) Proof of Identity (submit ONE of the following): Copy of driver’s license or state identification card (color copy preferable) Proof of Minnesota Residency of a majority owner of the company (submit ONE of the following): Copy of valid (non-expired/voided) Minnesota driver’s license or state identification card (color copy preferable) Copy of personal Minnesota income tax return Copy of current residential lease agreement or recent personal mortgage statement (on or after January 1st, 2022) Copy of recent residential utility bill in owner’s name (on or after January 1st, 2022), OR Copy of DD-214 from Department of Defense showing Minnesota address.

NOTE: A valid (non-expired/voided) Minnesota driver’s license or identification card will cover both of these last two requirements.

Potential additional required documents (if applicable): Form DD-214 showing Honorable Discharge from Military Service Documentation evidencing disability status Copy of Personal Tax Return of Owners (2020 or 2021 if available, to determine low-income eligibility) IMPORTANT NOTE: All documentation MUST include company name in the name of the file, e.g. SamsBakery-BusinessPlan.

pdf If you have all the necessary documentation, this application should take less than 30 minutes to complete. Additional Ineligible Businesses: Business located outside of the 11-county southeast Minnesota region . Sole proprietorships (single-member LLCs and corporations are eligible).

Liquor stores or establishments primarily selling liquor made off-site. Stores primarily selling tobacco or electronic smoking products, gambling operations, or adult oriented businesses. A 501(c)(3), 501(c)(6), or other non-profit business.

A business deriving income from passive investments without operational ties to operating businesses. A business primarily focusing on speculative activities based on fluctuations in price rather than the normal course of trade. A business earning more than half of its annual net revenue from lending.

A business engaging in pyramid sales, where a participant’s primary incentive is based on the sales of an ever-increasing number of participants. A business engaging in activities prohibited by federal law or applicable law in the local jurisdiction of the business. A business owned in-whole or in-part by RAEDI employees or their immediate family members.

Small Business Development Center. If you need free, confidential help with your business plan or financials, contact the SBDC . Targeted Group / Economically Disadvantaged / Veteran-Owned (TG/ED/VO) Small Business Procurement Program.

This procurement program is available through the Materials Management Division of the Minnesota Department of Administration. Details of the program can be found here with additional details in Minnesota Rules, Chapter 1230. MinnesotaWorks.

net. Businesses or private enterprises seeking to hire for positions in Minnesota may list any vacant or new positions with MinnesotaWorks. net .

The employer may also enlist the services of the Workforce Center Business Services staff to recruit and refer job candidates. Work Opportunity Tax Credit. The Work Opportunity Tax Credit is a federal tax credit available to all private sector businesses as an incentive to employers to hire workers in certain groups who consistently experience high rates of unemployment.

Details can be found here . If the project is approved, the information contained in the application will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act found in Minnesota Statutes, Chapter 13. Emerging Entrepreneur Loan Program FAQs Here are some Frequently Asked Questions regarding the Emerging Entrepreneur Loan Program.

New information will be added as it becomes available. Please check back frequently. We list an email at the end if your question is not addressed here, but due to the large volume of interest in this program, we may not be able to respond to every inquiry promptly.

These FAQs were last updated on 04/15/22. Applications are available now on the RAEDI site . Can I send in a paper or email application?

No. Due to the large volume of applications, we can only accept applications submitted through the online form. I started my application but didn’t complete it and left the website before clicking submit. Can I go back and start where I left off?

Yes, you should be able to continue your application from where you left off, as long as you’re using the same computer and browser. If it didn’t save, you are welcome to start again, complete a new application, and submit it. I completed the application and submitted it, but I either made a mistake or I need to update it.

Can I go back and change my information? No, you will be unable to edit your application once it’s submitted. You can submit another application, however, and your previous application will be disregarded; the last application you submit will be the one considered for loan consideration.

I am completing multiple applications for my different business clients. Can I do this? I think I uploaded the wrong document.

Is there any way to double check it? If you’re not sure if you uploaded the correct document, you can go back to your application before submitting and upload a new one. Due to the high number of applications, we cannot check it on our end for you once it is submitted.

You can submit another application, however, and your previous application will be disregarded; the last application you submit will be the one considered for loan consideration. I accidentally submitted more than one application. Will I be disqualified?

No. However we can only accept the last application you submitted. Any applications you submitted prior to the last one you submitted will be disregarded. Please do your best to avoid submitting more than one application for the same business.

Does it matter when I submit my application? There is no cutoff for applying for the Emerging Entrepreneur Loan Program, but applications are processed on a first-come, first-served basis. I need help filling out my application.

Where can I get help? I have poor personal credit. Should I apply for this program?

Yes, you should apply. Personal credit histories are pulled for informational purposes, but are not considered as part of the eligibility process. How long does my business plan need to be?

Your business plan needs to be long enough to communicate how your company will be successful, so that the finance committee can accurately evaluate it. If you need help with your business plan, contact the SBDC . I am uploading files to the application.

Do I need to do anything special to them? Make sure to include your company name in the name of the file, e.g. SamsBakery-ScheduleC. pdf.

How will selections be made? Rochester Area Economic Development, Inc. (RAEDI) administers the EELP for southeast Minnesota for DEED. RAEDI’s finance committee will evaluate applications, and make recommendations to the RAEDI Board.

The Board then advances the applications to the Minnesota Department of Employment and Economic Development, which makes the final approval. When will I know if I have been selected for a loan? We will contact applicants about the status of their loan application on a rolling basis, as they are received.

If I receive a loan, how will I get the funds? Once your application have been approved by DEED, your loan will be awarded by RAEDI via check, sent to your mailing address as indicated on the application. If I am not selected for a loan, will I be notified?

We will notify all applicants who provided an email address about the status of their application. However, due to the large volume of applications, we may not be able to respond to requests quickly. What documentation will I be asked to provide?

After you have been selected for an award, you may be asked by RAEDI for documentation that verifies you are eligible to receive a loan.

Some examples of documentation you may be asked to provide include – but are not limited to – the following: sales tax reporting, period statements from third-party sales platforms, merchant services statements, point of sale or register reports, third-party payroll processor reports, federal form 941/employer’s quarterly federal tax return, or other state or federal payroll-related filings.

If I am selected, what kind of documents will I have to sign to get this loan money? By completing the application, you are certifying that you are eligible to receive this grant and that the grant will be used for eligible uses only. Therefore, loans may potentially be made without additional contracts or certifications, but are subject to change, based on DEED’s requirements.

What can the funds be used for? The loan can finance a variety of startup and expansion costs, including normal expenses such as machinery and equipment, inventory and receivables, working capital, new construction, renovation, and site acquisition. Financing of existing debt is not permitted.

Can the funds be used to pay business-related insurance deductibles? Can the funds be used to repair my facility or equipment? Can the funds be used to purchase equipment?

Can the funds be used to pay back taxes including property taxes? Under any circumstances will I have to pay the loan back? Yes.

This is a loan that you will be required to pay back. Is the amount of the loan taxable to the recipient business? Please consult your accountant, lawyer, or other tax advisor.

RAEDI is unable to provide tax advice. I am self-employed, and I’m receiving unemployment benefits through the Pandemic Unemployment Assistance Program. If I receive a loan from this program, how will that affect my unemployment benefits?

Please refer to Unemployment Insurance rules and procedures for how to report a loan as income when you request your weekly benefit. What kind of businesses can not apply for a loan through this program? The following businesses would not be eligible: Business located outside of the 11-county southeast Minnesota region .

Liquor stores or establishments primarily selling liquor made off-site. Stores primarily selling tobacco or electronic smoking products, gambling operations, or adult oriented businesses. A 501(c)(3), 501(c)(6), or other non-profit business.

A business deriving income from passive investments without operational ties to operating businesses. A business primarily focusing on speculative activities based on fluctuations in price rather than the normal course of trade. A business earning more than half of its annual net revenue from lending.

A business engaging in pyramid sales, where a participant’s primary incentive is based on the sales of an ever-increasing number of participants. A business engaging in activities prohibited by federal law or applicable law in the local jurisdiction of the business. A business owned in-whole or in-part by RAEDI employees or their immediate family members.

Do I have to create or retain jobs for a loan? Not necessarily, although a goal of the program is to retain and increase jobs in southeast Minnesota. How long will this program last?

This is to be determined. While RAEDI received an initial allocation of funding from DEED, we expect to be able to increase the funding pool once the initial amount has been issued. I applied for and received a grant from another source (local or city government, nonprofit, foundation, etc.).

Can I still receive a loan from the state through this program? If I receive a loan from this program, how does that affect my Paycheck Protection Program loan? Please refer this question to your PPP loan servicer or financial advisor.

I received a Small Business Emergency Loan Program (SBEL) loan. Can I still receive a loan through this program? I’m looking to apply for a Main Street Revitalization grant.

Can I use these funds as matching dollars? No. The EELP is a program funded by the State of Minnesota, and MSR grants require the match come from non-state funding sources. Please consult your MSR administrator for more info.

I still have questions and I am not finding answers in this FAQ. Where do I send my questions? You can send your questions to swilliams@raedi.

com . We will be reading all questions that come in and updating the FAQ as quickly as possible. Due to the large volume of inquiries, we may not be able to respond individually to each question in a timely manner.

I see that interest rates have gone up since I put in my application. What rate will I be charged? If accepted, your loan will have the interest rate at the time of application, not the rate at the time it’s approved.

Are nonprofit organizations eligible for this program? No, nonprofits are not eligible for the EELP. Are cooperatives eligible for this program?

If cooperatives are structured to generate and distribute profits for the benefit of members or owners, they are eligible for this program. Can ESOP (Employee Stock Ownership Plan) businesses apply? If the ESOPs are structured to generate and distribute profits for the benefit of employees, they are eligible for this program.

I am a resident of another state, but my business has a permanent physical location in Minnesota. Is my business eligible for this program? No. The majority ownership of a business must be owned by one or more permanent residents of Minnesota.

What is the definition of “permanent resident of Minnesota“? For the purposes of this program, “permanent resident of Minnesota” means “resident” as defined by Minnesota Statutes (Minn. Stat.

290. 01). The term “resident” means any individual who is domiciled in Minnesota or is domiciled outside the state who maintains a place of abode in the state and spends, in the aggregate, more than one-half of the tax year in Minnesota, unless the individual or the spouse of the individual is in the armed forces of the United States.

The term “abode” means a dwelling maintained by an individual, whether or not owned by the individual and whether or not occupied by the individual, and includes a dwelling place owned or leased by the individual’s spouse. I am a permanent resident of southeast Minnesota, but my business has a permanent physical location outside of southeast Minnesota. Is my business eligible for this program?

No. Businesses are required to be located in southeast Minnesota. I am a permanent resident of Minnesota and I own more than one business located in southeast Minnesota. Can I submit separate applications for each business, and can my businesses be eligible for separate loans?

Possibly. You can only apply for one loan if you own more than 20% of another business. I do business under my own name.

Do I need to be registered with the Secretary of State to be eligible for this program? Not necessarily. If your business operates under your own name and not an assumed name or an LLC, S corporation, or other business formation, you do not need to be registered with the Secretary of State.

Sole proprietorships are not eligible for funding, however. Are municipal liquor stores eligible for this program? No. This program is limited to private for-profit businesses.

How is low-income defined? How do I know if I qualify? Low-income person means a person whose income is less than or equal to 80% of median income for their county of residence adjusted for family size.

Median income for southeast Minnesota counties can be found here . Can my business receive more than one loan? No. You can only receive one loan per business.

I own or I am part-owner of multiple businesses that could be eligible for an award. Can each of those business apply to receive a grant? Yes, as long as you own less than 20% of the other businesses.

I own a business with multiple locations. Can each of the locations be eligible to apply and receive a grant? Does my home-based business qualify for a loan Yes.

Home-based businesses are eligible for this program. What is the definition of a home-based business? According to IRS Publication 587 a home-based business is one that uses the owner’s home (or space within the home) as its principal place of business.

That is: It is used regularly and exclusively for administration or management of a trade or business, and The owner has no other fixed location where the business carries on a substantial amount of administration or management. I am self-employed and/or an independent contractor. Am I eligible for this program?

Yes, as long as your business meets all other eligibility criteria. Besides myself, my business does not have any employees. Am I eligible for this program?

My business has zero employees and/or hires independent contractors for some of its functions. Am I eligible for this program? My business employs more than 50 employees.

Am I disqualified from this program? Not necessarily. Businesses with more than 50 employees are required to provide 1:1 matching dollars with the loan amount.

My business only employs part-time employees. Am I disqualified from this program? My business is a for-profit farming operation.

Am I eligible for this program? Yes. If you are selected to receive a loan, you may be asked for information that verifies your farm is operated for profit and is not a so-called “hobby farm.

” My business is a minority business enterprise (MBE) and my business is also owned by a woman. How does my business falling under multiple categories for prioritization affect my odds of getting a loan? This program is processing applications on a first-come, first-served basis.

In the event that demand outweighs funding available, being eligible in multiple categories may affect prioritization by the finance committee. Do I have to show a certification that my business is a minority business enterprise, or a women-owned business to apply for this program?

No. If you disclose that your business may qualify under those categories, you may be required to provide additional information confirming the status of your business before receiving an award. Any official certification you received can be used as documentation, but it is not required to have this certification.

Do I have to show a certification that my business is owned by a veteran, low-income, or person with disabilities to apply for this program? Yes.

In order to apply for a loan under these categories, potential additional required documents would be (if applicable): Form DD-214 showing Honorable Discharge from Military Service Documentation evidencing disability status Copy of Personal Tax Return of Owners (2020 or 2021, if available, to determine low-income eligibility) I do not want to disclose my status as a minority-, veteran-, or woman-owned business. Am I required to?

No. However, if you are a minority-, veteran-, or woman-owned business, and you want your business to be considered for a loan, you will need to indicate that on your application. Is preference going to licensed businesses? What is the definition of a Veteran being used to be eligible for the veteran-owned business grant?

Veterans must meet the definition of a veteran as stated in Minnesota Statute 197.

447 that states a Veteran is: A citizen of the United States or a resident alien Separated under honorable conditions from any branch of the armed forces of the United States Served on active duty for 181 consecutive days or by reason of disability incurred while serving on active duty, OR: Met the minimum active duty requirement as defined by Code of Federal Regulations, title 38, section 3.

12a, OR Has active military service certified under section 401, Public Law 95-202 certified by the United States secretary of defense as active military service and a discharge under honorable conditions must be issued by the secretary. For more information, visit the MDVA website . Have a question?

Please email info@raedi. com or call at (507) 288-0208.