Information below is being shared from a Nov. 29, 2022, DEED newsletter.
The Minnesota Department of Employment and Economic Development (DEED) launched the Automation Loan Participation Program this week as part of the recently announced $97 million through the State Small Business Credit Initiative (SSBCI).
This program provides companion loans from DEED to cover financing gaps and expand financing opportunities for businesses purchasing machinery, equipment, or software to increase productivity and automation.
DEED loans through the new program can be worth up to $500,000 and need to be made in conjunction with private financing. Applications are open now. Full terms and requirements are available on DEED’s website.
Eligible borrowers include manufacturing, distribution, technology and warehousing businesses located in Minnesota. The program targets businesses with fewer than 500 employees.
Companion loans from DEED must be matched at least 1:1 by private financing. Both the ALPP loan and the private financing must be used for machinery, equipment or software to increase productivity and automation.
Regardless of the terms of the other private financing, the ALPP loan will have the following terms:
- Loan amount up to $500,000
- 1% interest rate
- The term will be 5 to 7 years based on the life of the asset
- Payments may be deferred 6 to 12 months
- If requested by lead lender, DEED can take a subordinate position on collateral
Additional considerations:
- The loan may not be used for the same purpose as any federally guaranteed private financing being used for the project.
- The machinery, equipment or software the business will purchase totals less than $20,000,000.
