(The Center Square) – Minnesota will loan up to $500,000 in federal funding for the purpose of assisting manufacturers buy equipment or software to increase productivity and automation.
The Minnesota Department of Employment and Economic Development announced Tuesday the availability of this program. It’s the latest component of the $97 million the state received through the State Small Business Credit Initiative from the U.S. Department of the Treasury.
The program’s designed to support manufacturing, distribution, technology and warehousing businesses in Minnesota with fewer than 750 employees, the department said. According to the release, these businesses have tended to be less likely to pursue automation and have less success in securing full financing for automation improvements from other lenders.
“Facing the tightest labor market in America, we know Minnesota businesses can’t create a larger workforce out of thin air,” DEED Commissioner Steve Grove said in the department’s news release. “A key strategy has to be automation – which is why DEED’s new Automation Loan Participation Program will help manufacturers automate more quickly to drive innovation and productivity gains that will help our economy grow.”
Loan program participants must secure matching private financing, provide collateral and guarantee the loan. The business must follow the U.S. Treasury’s guidelines, which include certifying that no principal of the business is a sex offender.
The loans have 1% interest on a five to seven-year term and payments can be deferred six to 12 months, the department said. The lead lender can ask DEED to take a subordinate position on collateral. Businesses can’t use the loan for the same purpose as any other federally guaranteed private financing for their project, and businesses can’t buy more than $20 million in machinery and equipment. The department will host a webinar about the program at 9:30 a.m. Dec. 1.
Other parts of the State Small Business Credit Initiative include the Automation Training Incentive program that provides grants of up to $35,000 to small businesses in manufacturing and skilled production to train existing workers quickly and effectively on new automation technology, a Growth Loan Fund of direct loans for early-stage technology companies and a Minnesota Loan Guarantee Program that provides 80% loan guarantees and a Direct Investment and Multi-Fund Investment Programs. The department and the University of Minnesota’s Office of Investments and Banking are investing in Minnesota startups in advanced manufacturing, agricultural technology and food technology, climate technology, life sciences, software and technology through two venture capital programs. DEED launched an online Small Business Hub to help entrepreneurs determine which agency resources are the best fit for their businesses, following the recommendation of the Governor’s Council on Economic Expansion.
The American Rescue Plan Act reauthorized the 2010 State Small Business Credit Initiative and provided $10 billion for state, territory and tribal business finance programs.