Small Business Loans & SBA Loans in Minnesota

Minnesota, the North Star State and Land of 10,000 Lakes, has a vibrant economic base with numerous small businesses that are the major employer for the state’s communities. Recognizing the importance of these businesses, local banks, various nonprofit organizations, and credit unions are more than willing to provide funds to support new startups and growth of existing companies.

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Types of Minnesota Small Business Loans

Over the years, lenders in Minnesota have gained significant experience putting together the best loans for small businesses operating in agriculture, manufacturing, tourism, and financial services. These lenders can structure short-term and long-term loans to meet the needs of local businesses.

SBA loans

SBA loans are business loans that are partially backed by the Small Business Administration (SBA), a federal agency. These loans are serviced by private lenders, but are popular because they generally have good interest rates.

Line of credit

Use a line of credit as a flexible form of financing. Unlike with a loan, this option does not involve a big disbursement upfront that you must repay, providing a flexibility that better fits many entrepreneurs’ needs.

Term loan

Term loans are common small business loans in which you would apply for a large disbursement of capital and then repays it over several years, along with fixed or variable interest.

Equipment finance

With equipment financing, you receive a piece of equipment and then pay off the cost of the equipment in installments. This way, your business can make money off the equipment immediately, even if you don’t have the funds to buy it at the sticker price.

Accounts receivable financing

Accounts receivable financing is an alternative form of business financing in which your unpaid invoices serve as collateral for a lump disbursement of funds.

Minnesota Small Business Loan Options

Just like the Northstar State has thousands of lakes, the state also has numerous lenders with extensive experience making loans to small businesses.

Minnesota Business Finance Corporation has over 35 years of experience making SBA 504 loans, in addition to arranging other types of financing.

Prarieland Economic Development Corporation is a certified nonprofit development company that specializes in making loans to small businesses.

Members Cooperative Credit Union can make loans to small businesses at attractive rates to finance the purchase of real estate, buy equipment, or support current assets with lines of credit.

Minnesota Bank & Trust offers SBA 7(a), SBA 504, and SBA Express Loans to business owners in the state.

North Star Bank offers a range of SBA loans including SBA 7(a) and SBA Express loans along with other small business loan products.

BankVista offers multiple types of business financing options including SBA loans, equipment loans, term loans, and lines of credit.

Bremer Bank offers multiple small business loan products including SBA 7(a), SBA 504, and SBA Express Line of Credit to small business owners in Minnesota.

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FAQs

What other resources are available to Minnesota small businesses?

SCORE is a nonprofit organization with retired business executives who are available to mentor and provide advice to small business owners. The SBA has an office in Minneapolis to provide counseling and arrange financing for businesses.

The Minnesota Department of Employment and Economic Development (DEED) has a Small Business Assistance Office that offers a range of resources to small businesses and also has several regional Small Business Development Centers.

What Minnesota small business grants are available?

Minnesota has several grant programs available for small businesses. DEED’s Job Creation Fund encourages businesses to expand and create new jobs, and employers can use its Training Grants Program to train or retrain employees.

For dairy farmers, the Minnesota Department of Agriculture offers grants to assist dairy owners with business and strategic planning for improved productivity and expansion.

What do I need to qualify for a loan in Minnesota?

Before you apply for a loan in Minnesota, you need to have your business set up and officially registered. If you’re going to operate as a sole proprietorship, you’ll need to register the name of your business with the local county clerk’s office. If you’re going to incorporate or operate as a limited liability company, you’ll need to check for name availability and register with the Minnesota Secretary of State.

To increase your chances of qualifying for a loan, you’ll want to find out what documents the lender wants and any other requirements. You should present a plan that details the purpose of the loan, the repayment terms you propose, and a description of the collateral being offered to secure the loan. The lender will want to see that you have carefully thought out the need for the loan, explained how it will improve your business, and assured the lender that the loan will be paid back as planned.

Which loan is right for my Minnesota business?

The type of loan you are seeking depends on what you intend to use it for. If you’re looking to buy a piece of machinery or another fixed asset, you’ll want to get a term loan payable over several years. On the other hand, if you need to finance a temporary buildup in current assets because of seasonality, you should apply for a short-term loan or a revolving line of credit.

Online platforms, like Lendio, have financial consultants who can discuss and analyze your needs and connect you with the best financing options for your particular situation.

How can a Minnesota business loan help my business?

Borrowing money is part of managing a business’ cash flow and providing funds for growth and expansion. Taking on a certain amount of debt increases the financial leverage of the company, but it also increases the owner’s return on equity. As long as the amount of debt and equity is controlled and kept in proportion, business loans add to the overall profit performance of the company.

What is an SBA preferred lender?

An SBA preferred lender is a lender that’s been approved by the Small Business Administration to administer SBA loans without additional approvals from the SBA. Typically these lenders have years of experience and can approve SBA loans faster than non-preferred lenders.

What are the benefits of an SBA loan?

SBA loans are backed by the government and offer lower interest rates than other types of small business loans. They typically require a minimum amount of time in business of two years and a credit score of 650+.

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