Emerging Entrepreneur Loan Program (EELP)

Funder: Minnesota Department of Employment and Economic Development (DEED), administered by Rochester Area Economic Development, Inc. (RAEDI)

Overview:
The Minnesota Emerging Entrepreneur Loan Program provides loan capital for businesses owned and operated by BIPOC (Black, Indigenous, Persons of Color), low-income persons, women, veterans, and/or persons with disabilities.

Program Goals

• Provide loan capital for underrepresented entrepreneurs
• Create jobs for BIPOC and/or low-income persons
• Strengthen BIPOC business enterprises
• Promote economic development in low-income areas

Geographic Scope

Eligible Region: Southeast Minnesota (11-county region). Twin Cities businesses are NOT eligible. Businesses must be based in southeast Minnesota with majority owner(s) being Minnesota residents.

Eligibility

Businesses must meet ALL of the following:

• Ownership: Majority-owned and operated by one or more Minnesota residents who are:
  • BIPOC (Black, Indigenous, Persons of Color)
  • Low-income persons
  • Women
  • Veterans
  • Persons with disabilities
  • OR any combination of the above
• Location: Based in southeast Minnesota (11-county region)
• Business Structure: NOT a sole proprietorship (single-member LLCs and corporations ARE eligible)
• Business Age: For micro-enterprises: fewer than 5 employees and generating revenue for less than 2 years
• Only one application per business allowed
• Maximum one loan per eligible business (can cover multiple projects)
• A business owner may not receive loans for multiple businesses where they own 20% or more

Loan Amounts

• Micro-enterprises (fewer than 5 employees, revenue generated for <2 years): $5,000 - $50,000 (no private matching funds required)
• Established businesses: Up to $100,000 (requires 1:1 private matching funds)
• General range: $5,000 - $150,000 per project

Eligible Uses

Loans can finance:

• Machinery and equipment
• Inventory and receivables
• Working capital
• New construction
• Renovation
• Site acquisition
• Startup costs
• Expansion costs

NOT eligible: Financing of existing debt

Eligible Business Types

• Technologically innovative industries
• Value-added manufacturing
• Information industries
• Retail businesses (only if they are micro-enterprises)

Ineligible Businesses

• Sole proprietorships
• Liquor stores or establishments primarily selling liquor
• Stores primarily selling tobacco or electronic smoking products
• Gambling operations
• Adult-oriented businesses
• 501(c)(3), 501(c)(6), or other non-profit organizations
• Businesses deriving income from passive investments without operational ties
• Businesses primarily focusing on speculative activities
• Businesses earning more than half annual net revenue from lending
• Pyramid sales operations
• Businesses engaging in activities prohibited by federal or local law
• Businesses owned by RAEDI employees or their immediate family members
• Located outside the 11-county southeast Minnesota region

Loan Terms

• Interest Rate: Up to the maximum allowable rate permitted by DEED (currently 10% maximum)
• Alternative Structures: Profit-based financing (for borrowers with religious prohibitions on interest, e.g., Sharia law)
• Origination Fee: 1%
• Term: 3-5 years, depending on the project

Important Notes

• Personal credit check: Run for informational purposes only; NOT used to determine eligibility
• All applicants must be interviewed by RAEDI staff to determine eligibility (translators welcome)
• Processing: Rolling, first-come, first-served basis
• Public Record: Approved application information becomes public record (except items protected under Minnesota Government Data Practices Act, MN Statutes Chapter 13)

Available Resources

• Guidelines available in: Somali, Arabic, Khmer, Spanish, and Vietnamese
• Free, confidential business plan and financial assistance from Small Business Development Center (SBDC)

Contact Information

• Email: swilliams@raedi.com
• Phone: (507) 288-0208
• Address: 221 First Ave SW Suite 600, Rochester, MN 55902

How to Apply

Application Submission:

• Applications are available online only (no paper or email applications accepted)
• Submit through the RAEDI online form
• Application should take less than 30 minutes if you have all required documentation
• Submitted applications cannot be edited; you must submit a new application if changes are needed
• The last application submitted will be the one considered for loan consideration
• Important: Include company name in the file name of all documents (e.g., SamsBakery-BusinessPlan.pdf)

Required Documentation

You will need to provide the following:

1. Business Plan
   • Must be long enough to communicate how your company will be successful
   • SBDC can provide free confidential help if needed
2. Financial Documentation
   • Financial Projections for three years (template available if needed)
   • Copy of Business Tax Returns for last three years (as available)
   • Year-to-date Income and Expense Statement (for existing businesses)
   • Balance Sheet (for existing businesses)
3. Personal Tax Returns
   • Federal and State returns for last three years of all owners
   • 2020 or 2021 returns (if available, to determine low-income eligibility)
4. Personal Financial Statements
   • Completed Personal Financial Statements for all owners who own 25% or more of the company (template available)
5. Proof of Identity (submit ONE of the following):
   • Copy of driver's license or state identification card (color copy preferable)
   • Copy of passport
6. Proof of Minnesota Residency of Majority Owner (submit ONE of the following):
   • Valid (non-expired/voided) Minnesota driver's license or state identification card (color copy preferable) - covers both identity and residency requirements
   • Copy of personal Minnesota income tax return
   • Current residential lease agreement or recent personal mortgage statement (dated on or after January 1, 2022)
   • Recent residential utility bill in owner's name (dated on or after January 1, 2022)
   • DD-214 from Department of Defense showing Minnesota address
7. Additional Documentation (if applicable)
   • Veterans: Form DD-214 showing Honorable Discharge from Military Service
   • Persons with disabilities: Documentation evidencing disability status

Application Process

1. Gather all required documentation
2. Ensure all files include company name in filename (e.g., SamsBakery-BusinessPlan.pdf)
3. Access the online application form on the RAEDI website
4. Complete the online application form
5. Upload all required documentation
6. Review your application for accuracy
7. Click "Submit"
8. Print the confirmation page as your receipt (no email confirmation will be sent)
9. Wait for contact: RAEDI staff will contact you about your application status on a rolling basis

Important Application Notes

• No multiple applications for same business: Only submit one application per business
• Session saving: If you don't complete your application in one session, you can return to finish it using the same computer and browser
• Multiple business applications: If assisting multiple business clients, complete each application in a new Private Window or browser to prevent cookie conflicts
• Document verification: Verify correct documents were uploaded before submitting; cannot be checked after submission
• Accidental multiple submissions: Not disqualifying; only the last submitted application will be considered
• Assistance available: The Small Business Development Center can provide professional guidance and free, confidential application assistance
  • SBDC website: https://mnsbdc.ecenterdirect.com/signup
  • Other assistance providers may be used, but cannot guarantee loan approval

After Selection

If selected for a loan award, you may be asked to provide additional documentation to verify eligibility, including:

• 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
• Other state or federal payroll-related filings

Review and Approval Process

1. RAEDI's finance committee evaluates applications
2. Committee makes recommendations to the RAEDI Board
3. Board advances applications to the Minnesota Department of Employment and Economic Development (DEED)
4. DEED makes final approval decision
5. Applicants will be contacted about status on a rolling basis

Fund Disbursement

Once your application is approved by DEED, your loan will be awarded by RAEDI via check sent to your mailing address as indicated on the application.

Notification

All applicants who provided an email address will be notified about their application status. Note: Due to large volume of applications, responses may not be immediate.