Loans and tax credits for business growth
Looking for a business loan from $5,000 to $20 million?
That’s an unusual range, but the Midwest Minnesota Community Development Corp. MMCDC is an unusual organization.
With headquarters in Detroit Lakes, the MMCDC is a non-profit organization that provides capital resources and innovative ideas to assist in successful business and community development throughout Minnesota and the Midwest.
The MMCDC is one of the largest non-profit lenders in the state.
It lends to businesses — both established businesses and start-ups — that aim to improve their community by creating new jobs and greater financial opportunities for residents.
In brief, here are the services offered by MMCDC:
- Business lending for new business and business expansions that generally serve to improve the community, such as the creation of new jobs, with loans ranging from $5,000 to $20 million.
- Community development and technical assistance. That means the MMCDC will identify community needs and create solutions, including the development of apartment buildings, homes with affordable payments and new subdivisions.
- Affordable housing initiative: The MMCDC manages rental properties that accommodate everyone from low-income and handicapped individuals to senior citizens in need of assisted living. It also restores buildings for affordable rental housing.
- The MMCDC provides affordable loans for home purchase and home repair by using a combination of low-interest loan products and down payment assistance.
- The MMCDC offers a number of advantages to businesses:
- Low interest rates – MMCDC can often provide a loan with a below-market interest rate, so eligible business owners can save on interest expenses.
- Flexible terms – MMCDC’s loan programs offer business owners flexible terms, providing more options when it comes to the length of the loan. As a result, business owners can enjoy more affordable monthly payments.
- Community development – By teaming up with MMCDC, eligible business owners get the personal satisfaction of knowing that they’re helping to improve the community in which they live.
- A wide variety of programs and financing options – Through MMCDC, eligible business owners are granted access to a number of loan programs that traditional lenders can’t always offer.
These programs feature low, and often fixed, interest rates, reduced closing costs and minimal down payments, so you need less money at closing.
New Markets Tax Credits
In 2012, MMCDC’s track record of successful rural community development was recognized and rewarded with an additional allocation of federal New Markets Tax Credits. This allocation is to be used exclusively within qualified rural areas of North Dakota, South Dakota, Wyoming and Minnesota.
New Markets Tax Credits make difficult-to-finance projects viable through lower interest rates, partial debt forgiveness, higher loan-to-value ratios, extended amortization periods, reduced debt service requirements, and/or interest-only payments for seven years.
Eligible businesses must be located in a low-income community, generally defined by a poverty rate of more than 20 percent, or median family income at or below 80 percent.
Tax credit allocatees, such as MMCDC, may seek projects located in communities with multiple indicators of distress. Tax credit eligibility also depends upon other factors, including the business activity at the site and the demonstrated need for low-cost financing.
MMCDC’s New Markets Tax Credit projects to date have included manufacturers, office space, retail stores and food co-ops, hotels, medical facilities, and sports and community centers.
Synergy loans are designed to help with everything from jump-starting a new business to expanding an existing one. These loans are made possible when you work with MMCDC to take advantage of the opportunities offered by the federal government’s New Markets Tax Credit program.
Synergy Loans are tailored to suit the needs of a business and may include a combination of the following benefits:
- The borrower saves money because interest rates on Synergy loans are below market rates.
- Synergy loans often include partial debt forgiveness.
- Less cash is needed at closing because Synergy Loans have reduced origination fees. And the higher loan-to-value ratio means you need a smaller down payment.
Synergy loans provide better cash-flow because interest-only payments for seven years allow your business to grow faster.
Plus, an extended amortization period lowers your monthly payments.
And a reduced debt service requirement means you have more borrowing power.
IRP Business Loans
Here’s some basic information about the IRP Business Loan Program.
Eligible borrowers include most for-profit businesses that are located in rural areas and provide employment opportunities to community residents.
Eligible borrowers include:
- Businesses located in areas with a population of 25,000 or less.
- Public agencies.
- Cooperatives with at least 51 percent rural membership.
Loans are available in amounts up to $250,000 or 75 percent of the project costs (with a $250,000 maximum). For larger projects, another lender may be involved to provide additional debt.
The term of your loan depends upon the type of asset you’re interested in financing.
Equipment loan terms range from 3-10 years. Real estate loan terms range from 15-25 years. Loan terms of up to 30 years are available if special circumstances exist.
Interest rates are determined by the MMCDC Board and are based on loan risk. Typically interest rates are fixed.
Rural Business Loans
Here’s some basic information about the Rural Business Enterprise Loan Program:
Eligible borrowers include most for-profit businesses that provide employment opportunities in rural areas. The MMCDC also has a special loan pool for Native American businesses in rural areas.
Eligible borrowers for the Rural Business Enterprise Loans include:
- Businesses located in areas with a population less than 25,000.
- Rural towns, communities and state agencies.
- Private, nonprofit corporations.
Loans are available in amounts up to $450,000, collectively. Up to 75 percent project financing is available for existing and start-up businesses on a typical structure.
The term of your loan depends upon the type of asset you’re interested in financing. Equipment loan terms range from 3-10 years. Loan terms of up to 30 years are available if special circumstances exist.
Interest rates are determined by the MMCDC Board and are based on the loan risk. Typically interest rates are fixed.