As a record number of unemployment applications continue to roll in throughout Minnesota, small business owners that do not qualify for unemployment benefits are still trying to stay afloat.
In response, Gov. Tim Walz signed an executive order on Monday afternoon that authorized the Minnesota Department of Employment and Economic Development (DEED) to create an emergency loan program to help small business owners in Minnesota who need immediate assistance.
“Over the last week, we’ve heard from many of Minnesota’s small businesses who are facing significant hardships because of the COVID-19 crisis,” Walz said in a prepared statement, referring to small businesses as the backbone of communities. “Now more than ever, we’re looking to creative solutions like DEED’s emergency loan program to help them weather these extraordinarily difficult times.”
The loan program is intended to help any small business temporarily closed under last week’s executive order that called for the shutdown of in-person dining at restaurants and bars, as well as other small businesses whose owners may not have adequate cash flow to withstand temporary closure.
It accesses $30 million from special revenue funds, according to DEED Commissioner Steve Grove, and will allow small businesses to apply for loans anywhere from $2,500 to $35,000. The loans will be 50 percent forgivable, and offered at a 0 percent interest rate.
It also allows local units of government to issue loans to retail and service providers for the next 90 days. DEED estimates that up to $28 million in capital could be accessible through local revolving loan funds and local governments through this action.
That’s up to $58 million available for small business throughout Minnesota.
“We know that small businesses and independent contractors are amongst the worst hit by the COVID-19 crisis,” Grove said. “We think it’s an important thing to do to help small businesses access new funds at this challenging time.”
Additionally, small businesses in Minnesota are eligible for disaster loans in accordance with the U.S. Small Business Administration (SBA). The loan program provides low-interest loans of up to $2 million to small businesses, and has long-term repayment options, up to a maximum of 30 years. You can get more information about that at www.sba.gov.
While that will be useful, Walz and Grove agreed that the federal loan programs don’t move fast enough, and recognized that small businesses in Minnesota need help now.
“This helps those small businesses with an emergency loan,” Walz said. “We think this will be a bridge to get folks through the next few weeks.”
In total, DEED estimates the loans offered to small businesses through this loan program will help between 1,200 and 5,000 small businesses throughout Minnesota.
More information regarding how to apply will be available later this week at www.mn.gov/deed.
That said, Grove encouraged every small businesses in Minnesota to apply for a disaster loan through the SBA, too.
“It’s critical we take advantage of every federal dollar that we can,” Grove said. “This program will help bridge that gap while that money comes in and help small businesses get more immediate relief.”
