Financial Assistance Guide

8/8/2019 Financial Assistance Guide

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F INANCIAL

ASSISTANCE

GUIDE

Creating Balanced and

Sustainable Economic Growth

in Douglas County


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InformationThe Alexandria Area Economic Development Commission(AAEDC) is a 501(c)(6) organization dedicated to driving the

economic wealth and stability of our communities and we takethis to heart in all that we do. In addition to financial assis-tance for businesses located in Douglas County, we provideassistance with business planning, demographic research, andsite selection. We are dedicated to building strong businessesand strong communities and will do our best to assist you inany way that we can. Our services are completely confidential

and cost free.

Lending Institutions of Douglas County:American National Bank 320-762-5330Bremer Bank- Alexandria 320-763-6622

Bremer Bank- Brandon 320-834-2249First National Bank of Osakis 320-859-2101First Security Bank of Evansville 218-948-2259First State Bank of Alexandria 320-763-4200First State Bank of Kensington 320-965-2419Gate City Bank 320-762-3100Glenwood State Bank 320-762-5222

Hometown Community Bank 320-763-7400MidMinnesota Federal Credit Union 320-762-2686 Neighborhood National Bank 320-763-8366State Bank & Trust 320-762-3200U.S. Bank 320-759-2785Viking Savings Bank 320-762-0236Wells Fargo Bank 320-762-2181


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Contact: Jason Murray, Executive DirectorAAEDC610 Fillmore St, Suite 1Alexandria, MN 56308(320) 763-4545 phone(320) 763-4457 faxemail: [email protected]: www.alexmn.org

The Alexandria Area Economic Development Commission is dedicated to drivingthe economic wealth and stability of our communities. A full complement of com-mercial loan programs is available to assist start-up or expansion business ventures

of any size. By offering low-interest financing, the AAEDC and our economic de-velopment partners help ensure an active and vital business community. Contact

the AAEDC to begin the financial assistance process for your business.

Revolving Loan Funds

Revolving loan funds (RLFs) can provide businesses with direct loans, loan guar-antees, and other financial assistance. As the Fund receives the principal and inter-est payments from outstanding loans, the money is made available to another bor-rower. This recycling of funds makes RLFs valuable when considering the grow-ing scarcity of dollars available for development. RLFs are designed to alleviate

the high cost and short supply of capital by providing flexible loan terms. Typically,RLFs provide lower rates, longer terms, and reduce the risk of the loan.

Greater Alexandria Industrial Network (GAIN)

Eligibility: Industries already in Douglas County that wish to expand or add facili-ties, industries that wish to acquire depreciable assets for the purpose of industrialor commercial expansion, and new industry locating in Douglas County.

Priority: Applicants who show a positive ratio of funds per quality job created.

Up to $50,000 maximum

Minimum of 5% private investment versus the utilization of GAIN investment

Minimum leverage ratio is 2:1, private debt to RLF debt

Alexandria-Douglas County Developers

The Douglas County Developers Revolving Loan Fund was established to create acounty-wide revolving loan fund for business growth and development. The RLF isdesigned to offer fixed asset financing primarily to private manufacturing and com-mercial business projects on a long-term basis for businesses located in Alexandriaand the surrounding area.

Eligibility: Acquisition and/or improvement to land, building, business facilitiesand equipment, new construction or renovation of existing facilities, demolition,rehabilitation or site preparation, equipment and machinery purchase, or acquisi-tion/improvement of real property for subsequent lease.

Priority: Projects creating new jobs with further priority based on the value of thewages and benefits paid to those jobs.

Up to $50,000 maximum or half of the total project costs whichever is less

The RLF will not finance working capital or professional fees

Minimum leverage ratio is 2:1, private debt to RLF debt

Revolving Loan Funds


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Revolving Loan Funds Cont.City of Alexandria Commercial Revolving Loan Fund

Eligibility: Acquisition for demolition, building rehabilitation improvements, demo-lition of non-functional buildings and public facilities.

Priority: Projects creating new jobs with further priority based on the value of thewages and benefits paid to those jobs.

Up to $50,000 maximum, not more than 50% of private funds, not less then

$5,000

Loan terms equal or less than private portion of loan

Interest rates are 3% below current U.S. Treasury Note Rate or 6% whichever

is higher

Service cost, loan fees and legal fees paid by applicant

Loan will be in a junior collateral position to the major source of funding,

unless RFL proceeds are the primary source of fundsLoan will be secured by a mortgage taken on the property to be improved

City of Alexandria Industrial Revolving Loan Fund

Eligibility: Land, building, machinery, equipment, working capital, relocation,demolition and public facilities.

Priority: Expansion of existing industry, creation of new business, demolition ofnon-functional buildings, job creation, job retention, building rehabilitation, equip-

ment acquisition, public facilities, working capital. Up to $50,000 maximum, not more than 50% of private funds, not less than

$5,000

Maximum of $10,000 per new job created

Loan terms equal or less then private portion of loan

Interest rates are 3% below current U.S. Treasury Note Rate or 6% whichever

is higherService cost, loan fees and legal fees paid by applicant

City of Alexandria Equipment Revolving Loan Fund

Projects must be located within city limitsOpen to businesses located in zoning districts I-1 (Light Industrial), I-2 (HeavyIndustrial), or I-B (Industrial Business).

Up to $50,000 loan amount or half of the equipment project cost, whichever

is less

Contact: Mike Weber, City PlannerCity of Alexandria704 BroadwayAlexandria, MN 56308(320) 763-6678 Phone(320) 763-3511 [email protected] Emailwww.ci.alexandria.mn.us


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Municipal FinancingTax Increment Financing (TIF)

Tax Increment Financing is a method local governments use to pay for the costs ofqualifying improvements necessary to create new development, redevelopment, or

public assisted housing. The financing of the qualifying improvements is paid fromthe increased property taxes generated from new development, redevelopment orhousing development that would not have occurred without such assistance.

Eligibility: Land acquisition, site work, administrative costs, city assessments, etc.

Tax Abatement

Tax Abatement is a municipal financing program that uses the increase in propertytaxes generated from new development and redevelopment to pay for qualifyingimprovements. To qualify for Tax Abatement, a project must meet a number of

public interest benefits established by Minnesota State Statutes. Each local unit of

government, i.e. city, town, county, and school district can grant tax abatement foreconomic development purposes. The abatement for a parcel may be for any one ofthe following, but not a mixture of two or more of these types of abatements:

A rebate of property taxes to the property owner;

A reallocation of taxes to pay bondholders;

A reallocation of taxes to pay for public infrastructure costs; OR

A deferment of property taxes.

Job Opportunity Building Zones (JOBZ)

Created in January 2001 for the purposes of economic revitalization, JOBZ is oneof the newest tools available to businesses to assist with expansion or construction

projects. 10 Job Opportunity Building Zones encompassing over 29,000 acres havebeen created for a maximum duration of twelve years from the start date of the pro-gram. Each JOB Zone includes acres for primarily industrial, value-added, or high

paying service businesses.Eligibility: Qualified businesses including businesses expanding into a Zone, busi-ness startups in a Zone, business relocations from other states, and business reloca-

tions from Minnesota.Requirements: Businesses must increase employment by a minimum of 5 full-timejobs or 20%, whichever is greater, within the first full year of operations in thezone.

Benefits:

Exemption from individual income taxes

Exemption from corporate franchise taxes

Exemption from state sales and use tax and any local sales or use taxes onqualifying purchases

Exemption from state sales tax on motor vehicles and any local sales tax on

motor vehicles

Exemption from the property tax

Exemption from the wind energy production tax

High paying jobs credit


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State Financing

Industrial Revenue Bonds (IRBs)

The City of Alexandria can use its bonding authority to help companies raise reve-nue for a project, and the money is passed through to a business which is responsi-

ble for repayment. Industrial revenue bonds are tax exempt, and therefore providethe borrower with the money at a lower interest rate. This type of financing is gen-erally for larger projects because the up-front expenses incurred with this financing

process require a bonding amount large enough to make the reduced interest rateand other benefits attractive.

Minnesota Business Finance Corporation (MBFC)

MBFC is a certified Development Company authorized by the U.S. Small BusinessAdministration to originate and service SBA 504 loans. The SBA 504 loan pro-gram is the money that makes America work. As a non-profit CDC, MBFC pro-motes economic development throughout Minnesota.

The SBA 504 Loan Program through the Minnesota Business Finance Corporationprovides long term fixed asset financing for small businesses. Proceeds may be usedto finance land, buildings, equipment, and related costs. SBA 504 loans are funded

jointly by a lender and the federal government. Borrowers benefit from a long-termbelow market fixed interest rate, minimal equity injection, and loan guarantees upto $1.3 million.

Contact: Tom Saehr,Senior Loan Officer

616 Roosevelt RoadSuite 200St. Cloud, MN 56301(320) 258-5005 Phone(800) 593-0123 Toll Free(320) 255-1815 [email protected] Emailwww.mbfc.org

Municipal Financing Cont.

Contact: Jason Murray, Executive DirectorAAEDC

610 Fillmore St, Suite 1Alexandria, MN 56308(320) 763-4545 phone(320) 763-4457 fax

[email protected] Emailwww.alexmn.org


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Regional Financial AssistanceWest Central Initiative has focused on supporting workers, businesses, familiesand youth in west central Minnesota since its inception in 1986. The organizationhas several different loan programs available, which are designed to be of assistance

to individuals, businesses, and communities throughout our region.West Central Initiative (WCI) is considered a gap lender that can finance 10-40%of total financing for qualified projects. They provide flexible, accessible, purpose-ful programs designed to have lasting impact. WCI attracts financial and humanresources from diverse sources and directs them toward existing and emergingneeds to improve the quality of life in west central Minnesota. They serve in a re-gional leadership role by developing collaborations and partnerships. WCI accom-

plishes this by initiating, facilitating and motivating action for positive change inour nine county region. West Central Initiatives Business Development Programscreate jobs and business opportunities leading to long-term community impact and

diversification of the economy.*WCI does not compete with local banks. Their funds are utilized as a part of thetotal financing package and cannot be utilized in projects that can be financed en-tirely by traditional sources.

West Central Initiative (WCI) Business and Industry Loan Fund

Eligibility: This fund was developed to provide loans to regional businesses. Fundsmay be used for business start-ups or expansions, purchase of real estate or equip-ment, and in some cases may be used for working capital or other intangible uses.

This Revolving Loan fund (RLF) is used for gap financing, and WCI works withthe businesses lending institution to provide a financing package.Priority: The creation of new jobs, retention of existing jobs, or acquisition of tech-nology that will increase business and employee earning capacity are the primaryconsiderations in funding.

Up to $300,000 maximum loan amount

Interest is typically less than commercial bank lending rates

Personal guarantee is required

Loan must be properly secured by collateral*Limited financing available through this program for service and retail businessesthat do not directly compete with other businesses in the trade area

WCI Small Enterprise Loan Fund (SELF)

Eligibility: Typically, these loans are to retail, service, manufacturing, or start-upbusinesses. The retail sector is limited to those businesses that are not unduly com-petitive against similar businesses in the immediate area. Projects must be environ-mentally sound and provide equal employment opportunities. Applicants mustdemonstrate their ability to cash flow and service the debt.

Priority: Creation of new jobs and business opportunities are the primary considera-tions.

Loans will be considered up to $35,000

Interest rates are typically lower than commercial bank lending rates

The loan must be fully collateralized

Project financed must cash flow



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Regional Financial Assistance Cont.West Central Childcare Loan Fund

The Childcare Loan fund was developed because the West Central Initiativerecognized the need for additional services in our region. Childcare is an essen-

tial aspect in the lives of many and adds to the quality of life in our region.This fund must be used for the renovations or products necessary in order forthe provider to obtain licensure in the State of Minnesota

Eligibility: Funds must be used for business start-ups or expansions.Priority: Expand the capacity of childcare services in our region.

Childcare loans will be considered up to $3,500

Interest rates are typically lower than commercial bank lending rates

The loans will generally be for no more then five (5) years

The loan must be fully collateralized

Project financed must cash flow


RAIN Source Capital Funds

RAIN Source Capital is a multi-state network of RAIN funds that works with angelinvestors who are interested in supporting growing businesses. RAIN Source helpsbring together like-minded angel investors to form individual RAIN funds and thenprovides these funds with capital, a process for due diligence, legal templates, man-agement support, access to deal flow, and other resources.RAIN funds share expertise, experience, and deal flow between RAIN Source Capi-tals multi-state network to support growing companies through the area.RAIN Source Capital is working with angel investors in Minnesota, Iowa, NorthDakota, South Dakota, Montana, Idaho, Washington, Oregon and other areas.RAIN Funds benefit communities by:

Creating a sustainable investment fund

Providing a source of capital and expertise critical to early and high growth

companies

Helping to recruit and nurture technology companies

Building the capacity for local wealth creation

Growing businesses that create good jobs.

Contact: Dale UmlaufWest Central Initiative1000 Western AvenueFergus Falls, MN 56537(218) 739-2239 Phone(800) 735-2239 Toll Free(218) 739-5381 [email protected] Emailwww.wcif.org

Venture Capital/Equity Injection


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Venture Capital/Equity InjectionLakes Venture Group, LLC

A member of the RAIN Source Capital network, Lakes Venture Group is an invest-ment group fund that focuses on making equity investments in companies primarily

in the Alexandria area. In addition, the group provides management expertise to astartup and early stage enterprises. Because Lakes Venture Group is a RAIN net-work member, they can assist companies seeking capital from Lakes Venture Groupto access additional capital from similar funds located throughout the state of Min-nesota.Lakes Venture Group, LLC currently has:

$510,000 capitalization

17 members

10 companies funded

Contact: Keith Anderson(320) 762-1709

Contact: RAIN Source Capital(651) 632-2140

Lakes Venture Group 2, LLCA member of the RAIN Source Capital network, LVG2 is an investment/venture

fund with a focus on investing in venture companies in out-state Minnesota. Itsportfolio companies are primarily early stage startup enterprises in diverse indus-tries such as medical devices, woodworking tools, and software. The RAIN rela-tionship enables companies seeking capital from LVG2 to access additional capitalfrom similar funds located in Minnesota, Iowa, South Dakota, and Montana.Lakes Venture Group 2, LLC currently has:

$820,000 capitalization

26 members

5 companies funded

Contact: John Reid(320) 834-6070

Contact: RAIN Source Capital(651) 632-2140

Contact: Steve B. Mercil1600 University Avenue WestSuite 401St. Paul, MN 55104(651) 632-2140 Phone(651) 632-2145 [email protected] Emailwww.rainsourcecapital.com


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Phone Numbers Alexandria Area Economic Development

Commission: (320) 763-4545

Alexandria Technical College - Small Business

Center: (320) 763-6678

City of Alexandria: (320) 763-6678

Douglas County Assessors Office:

(320) 762-3884

Douglas County Auditors Office:

(320) 762-3881

Douglas County Land & Resource

Management: (320) 762-3863

Internal Revenue Service: (800) 829-1040

MN Department of Employment and EconomicDevelopment (DEED): (800) 657-3858

MN Workforce CenterAlexandria

(320) 762-7800

State of MN Small Business Assistance Office:(612) 370-2324

West Central Initiative Fund: (800) 735-2239


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Notes_________________________

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610 Fillmore St

Suite 1

Alexandria, MN 56308

320.763.4545 phone

866.296.4545 toll free

320.763.4457 fax

www.alexmn.org

[email protected]

Helping to put together the

financing puzzle.

Financial Assistance Guide

Documents

Transcript of Financial Assistance Guide