General Purposes and Guidelines for Economic Development Loan Funds Seeded by CDBG/ HUD
Purpose and Goals
The purpose of the Economic Development Loan is to provide funds at reasonable rates and terms for the rehabilitation of commercial buildings in Fergus Falls. Eligible borrowers include non-profits, building owners, and business owners with building owner approval.
The maximum loan amount is $50,000.00, with a max term of 12 years, to be determined by the property owner's borrowing history and business narrative. The terms of this loan are at an interest rate of 2% below prime and no less than 4% interest, with payments to be made monthly to the loan agent, the City of Fergus Falls.
After loan approval, construction must begin within 60 days and be completed within six months. Building and business owners who do not hire a contractor or subcontractor and instead choose to rehab their own building or business will be reimbursed for the cost of materials only.
Loan funds may also be used for Residential Rental Rehab, but funds are targeted specifically to downtown apartments attached to commercial buildings and rentals located along main arterial streets as determined by the City.
Eligible Expenditures
Economic Development loan expenditures may include, but are not strictly limited to:
- Exterior and interior remodeling;
- Elimination of architectural barriers to handicapped and elderly;
- Costs of converting electrical services from above ground to below ground;
- Energy conservation improvements
Fees
There is a minimum application fee of $250 or 1% of the loan, whichever amount is greater. $100 of the fee is due up front, with the remainder due at closing.
Business Development for Fergus Falls may act to reconsider all guidelines on a case-by-case basis.
General Purposes and Guidelines for the Commercial Facade Improvement Program Seeded by CDBG/ HUD
Purpose and Goals
The purpose of the Commercial Facade Improvement Program is to provide funds at reasonable rates and terms for improvements to the exterior appearances of commercial buildings in Fergus Falls. Eligible borrowers include non-profits, building owners, and business owners with building owner approval.
The maximum loan amount is $25,000.00. Loans incur 0% interest up to $10,000 for 48 months and 2% interest from $10,001- $25,000 for 7 years.
Eligible Expenditures
Eligible Commercial Facade Improvement Program activities include but are not strictly limited to:
- Rehabilitation, restoration, ornamentation, and signage activities on front facades and back entrances in the city of Fergus Falls;
- Improvements to such things as signage, awnings, facades, windows, doors and exterior appearances.
Fees
There is a minimum application fee of $250 or 1% of the loan, whichever amount is greater. $100 of the fee is due up front, with the remainder due at closing.
Business Development for Fergus Falls may act to reconsider all guidelines on a case-by-case basis.
General Purposes and Guidelines for RLFs Seeded by the Minnesota Investment Fund (MIF)
Purpose and Goals
MIF aims to support the creation and retention of jobs, drive economic growth, and improve the quality of life in communities. The key goals include job creation and retention, investment in technology and equipment, leveraging private investment, expanding the local tax base, improving job quality, economic and employment opportunities, and productivity growth.
Eligible Expenditures
MIF funds can be used for a variety of purposes, including:
- Loans and Financial Assistance: Providing loans, loan guarantees, interest rate buy-downs, and other financial support, with RLF funds matched by private financing.
- Renewable Energy Investments: Funding strategic investments in renewable energy market development, with certain marketing expenditures exempt from matching requirements.
- Entrepreneur Support: Offering training, technical assistance, and financial help to entrepreneurs in line with federal guidelines.
Eligible Projects
Projects seeking assistance must meet the following criteria, as outlined in Minn. Stat. 116J.8731:
- Job Creation or Improvement; Higher Wages or Workforce Skills: Projects should create or retain jobs or improve them through higher wages, skills, or knowledge.
- Tax Base Growth: The project should increase the local tax base.
- Attraction of Private Funds: The project should attract private investment.
- Community Financing Limitations: Assistance (gap financing) is needed if local communities and finance partners cannot fund the project on their own.
- Support for Microenterprises: Supporting microenterprises through technical or financial assistance, as defined by federal guidelines.
- Business Retention: Assistance is necessary to retain existing businesses.
- Attracting Out-of-State Business: Helping to attract businesses from outside Minnesota.
- Green Economy Promotion: Projects should contribute to the green economy, but they must also meet other conditions.
Projects must involve participation from a financial institution.
Eligible Activities
RLF funds can be used for various business activities, including:
- Acquisition of land
- Construction or rehabilitation of facilities
- Site improvements
- Utilities or infrastructure development
- Purchase of machinery and equipment
- Employee training
- Working capital
Ineligible Activities
State MIF RLF funds have certain restrictions. They cannot be used for:
- Operating, constructing, or expanding casinos
- Sports facilities that host professional sports teams as principal tenants
- Retailing businesses
All assistance must adhere to approved RLF guidelines.
Wage Goals
Businesses receiving RLF-State MIF assistance must pay each employee a total compensation, including non-mandated benefits, that is at least 110% of the federal poverty level for a family of four. For more details, visit Minnesota Department of Employment and Economic Development.
Fees
- $100 application fee
- 1.5% origination fee
- All closing costs incurred, including legal fees.
General Purposes and Guidelines for Intermediary Relending Program (IRP) Funds Seeded by USDA Rural Development
Purpose and Goals
Loans using the IRP revolving fund must be for community development projects, the establishment of new businesses, expansion of existing businesses, creation of employment opportunities, or saving existing jobs. Loans from the City of Fergus Falls to borrowers must not exceed the lesser of:
- $250,000; or
- Fifty percent of the total cost of the ultimate recipient's project for which the loan is being made.
Eligible Expenditures
IRP loan expenditures may include, but are not limited to:
- Business and Industrial Acquisitions: To prevent a business from closing, save jobs, or create new employment opportunities.
- Construction and Development: For building, expanding, renovating, or modernizing a business. Includes leasehold improvements.
- Land and Property: To buy and develop land, easements, buildings, facilities, leases, or materials.
- Pollution control and abatement.
- Transportation services.
- Interest Payments: To pay interest during the period before the facility starts generating income (up to 3 years).
- Feasibility studies.
- Debt Refinancing: Refinancing is allowed if it saves or creates jobs or maintains essential services. Proper collateral is required for secured loans, and additional security may be needed for unsecured loans.
- Professional Fees: Reasonable and documented fees for services like loan packaging, environmental assessments, management consulting, and services from licensed professionals.
- Hotels, motels, tourist homes, bed and breakfast establishments, convention centers, and other tourist and recreational facilities except as prohibited by §4274.319.
- Educational institutions.
- Aquaculture-based rural small businesses.
- Broadband Infrastructure: Up to 10% of the loan amount can be used for broadband infrastructure related to the financed project, following specific regulations.
Eligible Projects
Project has participation from a financial institution.
Fees
- $100 application fee
- 1.5% origination fee
- All closing costs incurred, including legal fees.
