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PrimeRates provides access to personalized business loan offers through our simple and quick pre-qualification application. Once you're pre-qualified, you can select the best offer for you and finalize the business loan application with the lender.
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PrimeRates Guide to Small Business Loans in Minnesota
In fact, small businesses in the state of Minnesota currently employ more than 46% of the state’s workforce with approximately 1.3 million Minnesotans working under a small business operation.
The rate of lending to businesses via small business loans has held fairly steady since 2010, while total reported new lending to businesses via loans of $1 million or less reached $4 billion in 2019.
If you are a small business owner in the state of Minnesota, keep reading to learn more about small business loans and other forms of financial assistance available to you. We’ve compiled the information and the resources needed to learn how to take advantage of loans, grants and other opportunities.
How a loan can help your small business in Minnesota
Business loans and other forms of financing can help small business owners get access to the funds they need to start a company, manage the day-to-day operations of their business, or expand their business.
Small business loans are designed to cover everything from staffing needs and real estate purchases to new equipment financing and emergency expenses. Whether you need a small amount of funds to cover a one-time purchase or a large influx of capital to launch a new product a small business loan can help.
Types of small business financing options in Minnesota
There are several types of business financing for small business owners in Minnesota to consider:
- SBA loans: The SBA offers a variety of business loans specifically for small businesses in Minnesota. SBA loans are backed by the government so lenders can lend more generously. To get an SBA loan you’ll need to find an SBA approved lender. Check local banks to see which ones can offer SBA loans. While SBA loans may have favorable terms that can be time-consuming and difficult to qualify for.
- Term loans: Term loans are one of the most common types of business loans that business owners and entrepreneurs choose to obtain. Term loans are offered through several sources such as banks, credit unions, and even online lenders. They typically have a set repayment period, interest rate, and monthly payment - making them a very attractive financing option.
- Online business loans: As an alternative to using traditional banks and credit unions for your financing needs, business owners can seek out a loan from one of many online lenders. Online lenders have fewer overhead costs and operating expenses and so can offer competitive interest rates and other perks to consumers. As opposed to the weeks or even months it can take to fund a business loan from a local bank or credit union, online lenders can deposit the funds you need into your bank account in just a few business days due to a quicker and more lenient underwriting process. For these reasons, online business loans are becoming increasingly common.
- Commercial business loans: A commercial business loan can be used to finance various commercial purchases including vehicles, properties, or renovation and construction costs. This type of loan gives business owners a large influx of capital needed to pay for major purchases. Business owners can obtain this type of loan from a bank, local credit union, or online lender.
- Business credit cards: Credit cards can be a smart way to monitor spending and control cash flow, but they are not the best means of financing. In some cases you may be able to get a credit card with a 0% promotional period. For purchases this can help you spread out the cost without paying interest.
- Lines of credit: Businesses that need access to cash frequently may want to consider a line of credit. A line of credit can also be beneficial for seasonal businesses, which there are plenty of in Minnesota. A line of credit is typically secured by an asset and can be drawn on at any time during the loan.
Small business financing resources in Minnesota
The U.S. Small Business Administration (SBA) is a good starting point for businesses in any state to access resources and information about financing options including loans, investment capital, disaster assistance, surety bonds, and grants. SBA-backed loans are a popular option for many entrepreneurs.
In addition, business owners in Minnesota can benefit from taking advantage of the following resources:
- The Greater Minneapolis Saint Paul Regional Economic Development Partnership has a detailed Small Business Assistance page of resources and programs for Minnesotans to consider.
- The Minnesota Department of Employment and Economic Development has a similar page for business owners to access various assistance programs, loans, and grants. They also have a comprehensive guide to starting a business in the state of Minnesota and a page for financing a business in the state of Minnesota.
- The African Development Center (ADC) and Latino Economic Development Center (LEDC) both offer training, consulting, and financial assistance for minority business owners in the state of Minnesota.
- The University of St. Thomas/Small Business Development Center helps business owners with a variety of consulting services and workshops including free business plan advising.
- The Neighborhood Development Center is dedicated to providing the tools and resources that business owners need to be successful. They even have access to small business loans and free workshops.
Small business grants available in Minnesota
Small business grants are gifts of financial assistance that are designed to help business owners become successful while boosting the local economy. They do not need to be paid back like a business loan does.
Many grant programs focus on aiding certain segments of the business community such as veteran-owned, female-owned, or minority-owned businesses.
Small business grants are offered through government agencies, corporations, and nonprofits.
Business owners in the state of Minnesota have several options for seeking out grants including:
- The State Trade Expansion Program (STEP) Grant provides grants of up to $15,000 to small businesses to help them expand through international business development activities (such as attending trade shows or updating marketing materials for an international audience).
- Rural Business Development Grants are available for small rural businesses from the USDA.
- The SciTech Internship Program offers matching grants to employers offering paid internships to college students with STEM majors.
- The Minnesota Jobs Skills Partnerships (MJSP) offers a variety of DEED Training Grant Programs including the Minnesota Partnership Program which offers grants of up to $400,000 for the training of employees throughout the state. Likewise, the Job Training Incentive Program offers grants of up to $200,000 to eligible businesses to provide job training.
- The Automation Training Incentive Program provides grants to small businesses to train their workforce on new automation technology.
- Launch Minnesota offers grants of up to $35,000 to eligible startups in the state.
In addition to the resources above, business owners can also check state agencies such as the Minnesota Department of Education, Minnesota Department of Human Services, and others. Federal sources for small business grants include agencies like the SBA and USDA. Lastly, grants may be available at the municipal or county level as well.
Tips for applying for a small business loan in Minnesota
Business owners should consider the following tips when preparing to apply for a small business loan:
- Consider your credit: One of the most important things when you are applying for a business loan, or any other type of financing is your credit score. Applicants with low credit scores won’t be able to access the lowest interest rates or worse, they may not qualify for a loan. If your credit score is less than ideal, there are steps you can take to improve your score before applying such as paying down your debt, correcting any errors on your credit report, and asking for lenders to remove any late payments or other derogatory marks as a courtesy. You could also consider using a cosigner or co-borrower on your loan application. Before applying for a business loan you should check your credit score.
- Be prepared with a business plan: In addition to reviewing your credit score, most lenders will also need to see a business plan in order to approve you for a small business loan. A good business plan should include several key elements including an executive summary, financial plan, marketing plan, and operations plan. Afterall, you’ll need them to buy-in to your company's potential so you’ll need to bring your vision to life for them.
- Gather paperwork: Other paperwork often requested by lenders of small business loans includes any articles of incorporation, profit and loss statements, financial projections, earnings reports, tax returns, and bank statements. Some lenders may also require you to show proof of a certain amount of annual revenue or a minimum length of time in business. Gathering these documents before applying can help avoid any slow downs along the way.
- Consider alternative lenders: Business owners who are looking for the best deal should consider applying for a loan through various types of lenders including online lenders and credit unions. Loan requirements are often less stringent with these lenders and interest rates tend to be lower. Some of the top-ranked credit unions in the state of Minnesota include Harbor Pointe Credit Union, Mid Minnesota Federal Credit Union, Great River Federal Credit Union, North Shore Federal Credit Union, Minnesota Valley Federal Credit Union and Greater Minnesota Credit Union. In order to join your local credit union, you will need to meet certain membership requirements. Credit union membership is typically based on members’ location or employer.
After you have compared the various types of small business financing, gathered your business plan and other supporting documentation, and found a financial institution that offers the financing you need – it’s time to start the application process for your small business loan.
The next step is to get pre-qualified in order to compare interest rates and loan terms from several different lenders and find the best deal. So where can you check business loan offers? Primerates.
Compare rates and get funded
Comparing rates and understanding all of your options can help you make educated business decisions. At PrimeRates, we work with a variety of lenders who offer loans for businesses of all sizes. WIthin a few minutes you can receive personalized business loan offers that you actually qualify for - all without impacting your credit score. Say goodbye to the days of window shopping interest rates and unlock offers that you can actually take advantage of.
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