Purpose

The Koochiching Economic Development Authority (KEDA) wishes to stimulate private investment and economic diversification in Koochiching County. By identifying resources and leveraging local, regional, and state organizations and agencies, the KEDA can assist existing, new, or businesses relocating to the area. These programs vary in size, scope, and eligibility but the KEDA understands that every need is unique and will work with the individual business to find the right resource fit. Let the KEDA be your first step in exploring various funding options and resources. The various programs outlined here are intended to complement the business financing services of local lenders. Let the KEDA be your first step in exploring various funding options and resources.

Local Programs

Every incorporated city in Koochiching County has a small loan program intended to help small businesses. There is also a county-wide grant program – Koochiching Community Development Association (KCDA) – focusing on community development and small business development. The county also has a private gap-loan provider – Koochco.

Regional Programs

A number of gap and specialized lenders serve our county:

• Northeast Entrepreneur Fund – a private nonprofit organization that provides business consulting as well as loans for start-up and existing businesses.
• The Northland Foundation – The Northland Foundation provides both direct loans and participation loans to eligible businesses. They also provide loan guarantees.
• Arrowhead Regional Development Commission (ARDC) – The ARDC has a revolving loan fund that functions as a gap lender with a participating local bank.

State Programs

The KEDA works with the state through the Department of Employment and Economic Development (DEED), which has a number of programs to support job creation and economic development projects within Koochiching County.

Funding Sources

Lending Institutions

City of International Falls Commercial Loan Program

Program Guidelines/Eligibility Requirements:

• Improvements to commercial property
• Business must be located in corporate city limits
• Up to $24,999.99
• 3% interest; monthly payment equals about $108 on a loan of $24,999.99
• Collateral shall be a mortgage on the real estate to be improved by proceeds of the loan
• Closing costs paid by borrowers
• Program requires loan of equal or greater value from a local participating bank
• Loan is amortized over 30 years with a balloon payment due in 7 years or if property is sold
• Loan documents prepared by your bank which services both loans

Contact:
City of International Falls
600 4th Street
International Falls, MN 56649
(218) 283-9484

Koochco Loan Program

Program Guidelines/Eligibility Requirements:

Businesses must be located within Koochiching County. All Koochco loans will be term loans. Maximum amortization will be 20 years and active participation will be limited to 5 years in most cases. The policy will require a balloon payment or call provision after the fifth year of the loan.

The Koochco loan will be no more than 50% of the project financing with a maximum loan amount of $40,000; the remainder to be financed by a private lending institution. Interest rate on the Koochco portion will be 1% less than bank rates and follow bank rate structure.

Collateral coverage must satisfy both Koochco and the bank; personal guarantees are required. Demonstrated credit worthiness and commitment of the applicant is required; management experience or other qualifications will be reviewed, as well as marketing plans. Projects that are entirely or primarily a refinancing of existing debt will not be allowed unless such refinancing will result in a significant upgrading or expansion of operations and creation of jobs.

Eligible Businesses

• Resort/tourism projects which attract expenditures from outside the region
• Manufacturing and industrial operations
• Service, office sector, health care, cold weather testing
• Retail businesses will be considered case by case
• Wood products
• Agriculture
• Special consideration is also given to businesses locally started and funded, demonstrating renovation and growth potential
• The applicant may be for-profit or non-profit and may be new or expansion of an existing business.

Eligible Uses of Loan Funds

• Land and building acquisition and improvements
• New building construction and building renovation
• Purchase of machinery and equipment
• Resort expansion of facilities or upgrading of accommodations
• Working capital (not a revolving line of credit)
• Inventory purchase
• Reasonable accounting, legal, architectural, engineering and appraisal fees

Click here to download the Koochco Loan Application

Contact:
Koochco, Inc.
3214 2nd Ave East
International Falls, MN 56649
(218) 283-8585

Koochiching Community Development Association

Program Guidelines/Eligibility Requirements:

To be eligible for this program, the project or entity must be located, intended to be located, or provide services within Koochiching County.

The entity seeking assistance may be for-profit, non-profit, or a Governmental entity and may be new or an expansion of an existing business.

Terms of the funding will be at the discretion of the Association and will not exceed $5,000 per project. The Association will accept applications and distribute funding on a quarterly basis.

KCDA Business Application

KCDA Community Enhancement Application

Contact:
Koochiching Community Development Association
Kyra Hasbargen, Secretary/Treasurer
PO Box 138
3214 2nd Ave East
International Falls, MN 56649
(218) 283-8585

Littlefork Commercial Loan Program

Program Guidelines/Eligibility Requirements:

• Business must be located in corporate city limits, however, amendments can be considered by the City Council to assist business outside the City
• Minimum loan $5,000 up to a maximum of $50,000
• Minimum rate of 6% interest
• Collateral satisfactory to the City and lending institution
• Program requires loan bank participation and owners investment of equity
• Loan documents prepared by your bank which services both loans

Eligible Uses of Proceeds:

1. Land and building acquisition
2. Land Improvements
3. New building construction
4. Building renovation
5. Purchase machinery/equipment
6. Working capital (not a revolving line of credit)
7. Inventory purchase
8. Limited refinancing:
   1. Associated with job expansion
   2. Results in new job creation
   3. Improved collateral position of the City

Eligible Businesses:

1. Tourism projects which attract tourism from outside the area
2. Energy-related businesses that utilize indigenous fuels
3. Technologically innovative industries
4. Manufacturing/industrial operations/services/supply
5. Forest/wood products
6. Agriculture
7. Professional offices

Ineligible Businesses:

1. Retail/Service – however, there may be exceptions
2. Construction
3. Media
4. Transportation
5. Speculative Real Estate

Contact:
City of Littlefork
901 Main Street
Littlefork, MN 56653
(218) 278-6710

City of Big Falls Commercial Revolving Fund

Goals and Objectives:

• The RLF will be used to assist businesses that will create or maintain jobs and alleviate economic distress or address other community development needs.
• To provide debt financing to projects that otherwise may not occur due to a gap in funds available from owner and conventional sources.
• To stimulate development for the purpose of job creation or retention, tax base enhancement, and development which enhances the economic base for the area.
• The revolving loan fund supports job opportunities to alleviate unemployment and underemployment.

Standard for the RLF Projects:

The RLF portfolio taken as a whole will meet the following standards. At times individual loans may vary from these standards due to highly unusual circumstances or overriding factors which may make deviation a necessity. The following are the minimum standards for the RLF portfolio:

• The RLF will provide no more than 75% of the total project cost.
• Collateral shall be in the form of a mortgage or title lien, with the City of Big Falls listed as 1st Secured party.
• The maximum loan will be for $25,000
• Eligible uses are for new businesses or existing business expansion. Uses include land, equipment and building acquisition and construction or remodeling.
• Ineligible fund uses are working capital and refinancing of existing debt.
• All accounts owing to the City of Big Falls must be current, including taxes, special assessments, utilities and other loan programs.
• Local contractors shall be used whenever possible.
• The maximum term of the loan shall not exceed 7 years.
• The interest rate shall be tied to a prime or fixed rate as determined by the Revolving Loan Committee at the time of the loan closing.
• The applicant shall be responsible for all “Hard Costs” of the loan process. These costs may include but are not limited to attorney’s fees, appraisal fees or other costs incurred during the application.

Contact:
City Office
PO Box 196
Big Falls, MN 56627
(218) 276-3300
bigfalls@paulbunyan.net

Hours: Mon. – Thurs. 8 a.m. to 4 p.m.

City of Northome Commercial Revolving Fund

Program Guidelines/Eligibility Requirements:

• Business must be located in corporate city limits
• Up to a maximum of $6,000 with a required equal matching contribution from the applicant and repayments to be made on the basis of one-year repayment for each $1,000 loaned.
• Available to finance legitimate business activity, new or existing, or to individuals for improvements to housing. Activities not eligible include personal vehicle purchase or lease, purchase of personal items, travel, training, or inventory expenses.
• Loan rate is 1.5%.
• Loans must be secured.

Contact:
City of Northome
P.O. Box 65
12060 Main Street
Northome, MN 56661
(218)897-5762 or (800)862-6521

Regional Resources

Arrowhead Regional Development Commission (ARDC) Revolving Loan Fund

Purpose:

The purpose of the ARDC/RLF is to support business activities for which credit is not otherwise available on terms and conditions that would permit completion and/or the successful operation or accomplishment of the project in the seven-county region of Northeast Minnesota.

The primary objective of the program is the stimulation of private investment in order to create and maintain productive, permanent employment through the establishment of new businesses or the expansion of existing businesses.

Financing provided in conjunction with this program is intended to compliment, not compete with private lending institutions. As such, securing private sector involvement is a critical factor in qualifying for this program. Loans will generally be subordinated to the interests of private sector lenders in order to encourage their involvement.

Other Financing Policies:

• Loan recipient must be a for-profit business.
• All loans must be adequately secured & personally guaranteed.
• All loans shall be subject to whatever agreements/documents are reasonably necessary to protect the interests of ARDC.
• Loan recipients must demonstrate that they are credit worthy.
• All recipients must demonstrate an acceptable level of job creation/retention and private sector investment.
• All loans shall be subject to the provisions of the Davis Beacon Act with respect to prevailing wage rates.
  Applicants for RLF financing must demonstrate that credit is not otherwise available on terms and conditions which would permit completion and/or the successful operation or accomplishment of the project activities to be financed.

Eligible Businesses/Priority economic sectors that are eligible for assistance through this program include:

• Aviation/Aerospace
• Manufacturing
• Renewable Resources
• Technology
• Energy
• Other

Leveraging Requirements:

• Jobs
  • Applicants must demonstrate that they will create or retain a minimum of one job per $10,000 in ARDC/RLF assistance.
• Private Sector Investment
  • Applicants must demonstrate that they will leverage a minimum ratio of two private sector dollars to one ARDC/RLF dollar (2 to 1).
  • Applicants must also demonstrate the minimum leveraging ratio, exclusive of owner’s equity investment is one private sector dollar to one ARDC/RLF dollar (1 to 1).

Financing Policies:

• Allowable Use of Proceeds
  • Minimum loan size -$10,000
  • Maximum loan size- $250,000
  • Fixed assets, including land and building purchases, building construction, leasehold improvements, and renovations (twenty-year term max); and/or
  • Acquisition, renovation or moving machinery and equipment (ten-year term max); and/or Working capital (term loans only, five-year max)
• Term of Loan – The length of any loan made by the ARDC/RLF will be based on the assets being financed.
• Interest Rate – Interest rates will be based on the current money center bank prime rate as quoted in the Wall Street Journal, minus four (4) percentage points, rounded up to the nearest 1/4 percentage point. Minimum interest rate of four (4) percent.

Fees and Charges:

• Origination Fee – A 1½ percent loan origination fee will be charged to all borrowers participating in the ARDC/RLF. Such fee is to be paid only for approved loans but must be paid at or prior to closing with the applicant’s own resources.
• Loan Servicing Fee – 1% per year, based on outstanding principle balance.
• Legal Costs – Borrowers are responsible for legal costs incurred by the ARDC/RLF in the closing of the borrower’s particular loan.

Minnesota Business Finance Corporation (MFBC) SBA 504 Loans to Small Businesses

Program Guidelines/Eligibility Requirements:

Minnesota Business Finance Corporation (MBFC) is a private not-for-profit, company that is authorized by the U.S. Small Business Administration to originate and service SBA 504 loans.

The SBA 504 loan program provides fixed asset financing for businesses. Projects can include new construction, acquisition, renovation and remodeling of buildings, as well as equipment acquisition. MBFC partners with commercial lenders to provide secondary financing of 30 to 40% of a project with the bank providing 50% of the project and the borrower having an equity contribution of 10 to 20%. The bank’s loans have a senior position on collateral with MBFC taking a second mortgage or lien on the assets financed.

The SBA 504 loan provides a fixed interest rate for the term of the loan (up to 20 years). The terms of the bank’s loan are negotiated with the borrower and the bank. With the 504 loan program, the bank loan is separate from the SBA 504 loan.

Minnesota Business Finance Agency

Contact for Koochiching County:
Bemidji, MN
(218) 759-8481

Contact for St. Louis County:
616 Roosevelt Road, Suite 200
St. Cloud, MN 56301
(320) 258-5000

Entrepreneur Fund Business Financing

Through flexible loan programs, NEF helps aspiring entrepreneurs launch start-up businesses and experienced entrepreneurs do turnarounds and capitalize on emerging opportunities.

Financing is available from $1,000 to $35,000 for start-up businesses, and up to $150,000 for established businesses.

Working side-by-side with you, NEF has created lending products and an easy process to give you upfront access to small business financing and on-going support to ensure success.

NEF knows that building a business takes more than money; it takes a lot of hard work. So when NEF makes a loan, they make a mutual commitment to your on-going success.

• The Entrepreneur Fund, with its $7.5 million capital pool, can be the sole lender, or it can partner with banks and economic development organizations to provide financing.

Contact:
Virginia Office
8355 Unity Drive
Suite 100
Virginia, MN 55792
(218)749-4191
Duluth Office
202 W. Superior Street
Suite 311
Duluth, MN 55802
(218) 623-5747

Northland Foundation Business Loans

Program Guidelines/Eligibility Requirements:

The Northland Foundation provides flexible, reasonably priced financing to eligible businesses, mostly in conjunction with other lenders. The main goals of the program are to stimulate private sector investments and create and retain jobs, which enhance the Arrowhead Region’s ability to grow and prosper.

There are two types of Business Loans. The first is a direct loan in which the Northland Foundation is the originator of the note. The second is a participation loan in which the Northland Foundation purchases a part of a loan from another lender.

• • Business loans generally range from $50,000 to $500,000.
  • Interest rates are negotiated fixed or floating rates, generally equal to or less than the rates charged by commercial banks.
  • Loan term and amortization are based on the assets financed, collateral securing the loan, and needs of the business. Amortizations will generally not exceed 15 years. Loan maturities for longer-term amortizations will generally include balloon payments.
  • Loans may be subordinated to the interests of institutional lenders to encourage their involvement.

Northland Foundation
202 West Superior Street, Suite 610
Duluth, Minnesota 55802
(800) 433-4045
www.northlandfdn.org

State Resources

State Financing Programs