SCORE Minnesota

Minnesota Funds Veteran Small Business!

July 20, 2010

A formidable challenge that SCORE counselors try to help aspiring entrepreneurs and small business owners overcome is a lack of funding. In the midst of daily reports about how battle-weary small businesses are starving to death as a result of the recession, I have some very positive news. The proverbial Calvary is on its way. On the Positively Minnesota website you will find details of a new loan program offered through the Minnesota Department of Employment and Economic Development (DEED). They are offering veterans of the Gulf war the equivalent of FREE money!

Are you a veteran who is an essential employee or owner of a business that has suffered economically because you were called into military service for 180 days or more? If so, you could be eligible for one of two types of business loans of $5000-$20,000.

The term for the loans is 4 ½ years, requiring no repayment for the first 1 ½ years and equal monthly payments for 3 years. Best of all, the loans are interest FREE! But, you must hurry to apply before the $400,000 fund is gone. Details of the Minnesota Reservist and Veteran Business Loan Program are listed below:

Types/Purposes:

1. Business Loans. To provide relief, via interest-free loans, for small businesses which suffer substantial economic injury as a result of an essential employee being called to military service for 180 days or more.

1. Start Up Business Loans. To provide financial support, via interest-free loans, for recently separated veterans to start veteran-owned small businesses.

Loan Overview:

Both types of loans are one-time loans of $5,000 to $20,000 for eligible businesses and veterans.  The loan term is 4 ½ years, with no repayment for the first 1 ½ years and equal monthly payments over the remaining 3 years.  The loans are interest-free.  The revolving loan fund totals $400,000; applications will be accepted and loans made until all funds are committed.

Eligible Businesses:

Both types of loans are for small businesses, as defined by Minnesota Statute 645.445, which specifies the following:

• a for profit business entity which is not an affiliate or subsidiary of a business dominant in its field of operations, and
• has either 20 or fewer full-time employees, or
• had less than $1 million in annual gross revenue in the preceding fiscal year, or
• if the business is a technical or professional service, has less than $2.5 million in annual gross revenue in the preceding fiscal year

1. Business Loans:

A business must be operating in Minnesota on the date that one or more essential employees received orders for active service of 180 days or more and be sustaining or likely to sustain suffering substantial economic injury.  Active service includes state active service, federally funded state active service, and federal active service.

An essential employee must be:

• a military reservist, and
• an owner or employee of an eligible business, and
• have managerial or technical expertise critical to the day-to-day operations of the business

The eligible business must be sustaining or likely to sustain an economic harm, meaning it cannot or anticipates not being able to meet its obligations as they mature, or pay its ordinary and necessary operating expenses, or manufacture, produce, market, or provide a product or service as it has ordinarily done.

DEED will use the following criteria when determining whether an applicant is eligible for a Business Loan:

• Is the applicant an eligible business?
• Is the employee essential?
• Is the business sustaining or likely to sustain an economic harm?
• How likely is the applicant to repay the loan?
• How likely will the loan help the business prevent, remedy, or ameliorate the substantial economic injury shown by the applicant?

2.  Start Up Business Loans:

An eligible business must be majority owned and operated by a recently separated veteran (separated from active service after September 11, 2001).

Veterans that qualify under this program must:

• Have been on active duty on or after September 11, 2001, and
• Have been separated from service under honorable conditions after having been on active duty for at least 181 consecutive days or for the full period for which called to active duty (or after reason of disability incurred while on active duty)

DEED will use the following criteria when determining whether an applicant is eligible for a Start Up Business Loan:

• Is the small business owned and operated by an eligible veteran?
• How likely is the applicant to repay the loan?
• How likely will the loan help the applicant execute the business plan to make it a successful business?

Upon loan approval:

• DEED and applicant execute a loan agreement
• DEED and applicant execute a promissory note
• Applicant/owner provides personal guaranty of repayment
• Applicant/owner provides other security that may be required by DEED

Statutory References:

• Minn. Stat. 116J.996
• Minn. Admin. Rules 3335.0100 to 3335.0107
• Laws 2008, Chap. 363, Art. 10, Sec. 3, Subd. 3, part (b)
• Laws 2010, Chap. 347, Art. 1, Sec 6

Application:

The Minnesota Reservist and Veteran Business Loan Program applications are available from the Department of Employment and Economic Development (DEED) at Positively Minnesota website; search the site for “reservist and veteran business loan”.

For assistance completing an application contact your local Small Business Development Center (SBDC). To find a location near you, click on Find a SBDC near you.

Questions:

• Minnesota Reservist and Veteran Business Loan Program questions? Contact:         Jeff Nelson, Senior Loan Officer Jeff.M.Nelson@state.mn.us 651-259-7523

• Veterans Employment Services questions?  Contact:  Jim Finley, Veterans Program Director  Jim.Finley@state.mn.us651-259-7557

or your local Veterans Employment Representative http://www.deed.state.mn.us/veterans/list.htm

If you want to learn more about how to start, operate and grow a successful business contact SCORE by clicking the link on the right to the office nearest you or click here to request free face to face counseling.

Have you ever considered volunteering for SCORE? Our members help millions of new or existing small businesses succeed each year by sharing their knowledge and experience. Click here or the link on the right to the office nearest you to learn more.

Susan Fronk, St. Paul SCORE
View more posts by Susan Fronk

Filed under: Entrepreneurship,Financial,Start-Up

Tags: gulf war veterans, small business, small business funding, small business loan programs, Veteran Owned Small Business