Governor Tim Walz and the Minnesota Department of Employment and Economic Development (DEED) today launched a new effort to support and grow small businesses in Minnesota.
“Small businesses are foundational to Minnesota’s economic ecosystem – they’re at the heart of our communities, our workforce, and our state’s economy,” said Governor Walz. “This program will make it easier for small businesses to access loans that are critical for their growth and long-term success and help us build a thriving state economy.”
The $10 million program will provide low-interest loans to small businesses, promoting the growth and success of Minnesota’s small business economy.
“Small businesses drive economic growth, create jobs, and build community across the state. We’re committed to their growth and success,” said Lieutenant Governor Peggy Flanagan. “From helping entrepreneurs access low-interest loans to start their businesses to providing paid family and medical leave to help small businesses support and retain workers, we’ll continue working alongside business owners and entrepreneurs to build a diverse and vibrant small business ecosystem.”
DEED’s $10 million Expanding Opportunity Fund will support entrepreneurs who have struggled to access capital through traditional bank loans. The fund is designed to support historically under-funded small businesses operated by women, people of color, or in Greater Minnesota.
“Small business owners and entrepreneurs are often unable to get the loans they need to start or expand their businesses – a critical miss for job creation, business growth and community development,” said DEED Commissioner Matt Varilek. “Small business owners look to DEED to deliver for them – and that’s exactly what we’re doing. Our new Expanding Opportunity Fund will benefit small businesses by providing access to the capital they need to take off and thrive.”
DEED is now accepting applications from non-profit lenders interested in participating in the Expanding Opportunity Fund. Lenders can receive up to $600,000 at one time to provide low-interest loans to the small business owners they serve.
“Nonprofit lenders are located statewide, often share the culture of their borrowers and focus on serving targeted populations. But right now, they are unable to meet the demand and community needs for small business loans,” said DEED Deputy Commissioner for Economic Development Kevin McKinnon. “Expanding lending to serve these small businesses will empower more companies start up and to expand.”
The Expanding Opportunity Fund builds on recent DEED efforts to support small businesses by easing access to borrowing.
DEED’s Emerging Entrepreneur Loan Program provides funding through nonprofit partners for businesses owned and operated by people living with disabilities, people experiencing low income, people of color, women, and veterans. Last fiscal year, the program saw record lending numbers, including 61 new loans for over $2.6 million, leveraging over $14.8 million in private funding and creating an estimated 202 new jobs for new and expanding businesses.
Last fall, DEED launched the State Small Business Credit Initiative, a slate of six federally-funded programs to provide more capital to small businesses statewide. So far, the programs have facilitated $14.7 million in loans to businesses and have 47 enrolled nonprofit or CDFI lenders.
CNBC recently named Minnesota a top-five state for business, and small business growth is particularly strong: Small business starts have increased by nearly one-third in Minnesota since 2019, and businesses are launching faster than they did before the COVID-19 pandemic. In 2022, new business starts totaled over 61,000, nearly 15% above 2020.
Minnesota also has the best five-year survival rate for small businesses, according to data released in October by the Bureau of Labor Statistics.