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