The Hutchinson Economic Development Authority has a number of financial resources available to assist downtown business and local industry.
In this section, you will find some general information on how economic development projects are funded along with a summary of the financial resources available. For an overview of how economic development projects are financed, please read Financing Economic Development Projects (pdf).
Hutchinson’s business subsidy policy (pdf)
Financial Resources
A number of resources are available to help finance economic development projects. In this section, you can access details on program requirements, eligibility criteria, rates, terms and contact information.
HUTCHINSON ECONOMIC DEVELOPMENT AUTHORITY
Eligibility
- Businesses must be located, or be willing to relocate, within the city limits of Hutchinson.
- Manufacturing, assembly, warehousing, research & development facilities, call centers & administrative processing centers are eligible.
Requirements
- At least one job created is required for every $25,000 in assistance provided.
- Wages for jobs created must be at least $10.19 per hour, exclusive of benefits.
- Funds can be used for land & building purchase, building construction, renovation and / or expansion, machinery & equipment, working capital and inventory.
- Immediate repayment of the outstanding balance is required if the business relocates outside Hutchinson
Rates/Terms
- Rates range from a flat rate of 2% up to Prime + 3%, as determined by the EDA Board. Typically rates will be similar to those available from a commercial lender.
- Loan terms up to 10 years are available.
- Loan amounts up to $150,000 are available.
- Applicants creating a significant number of jobs or paying higher wages may receive preferential loan terms.
- The EDA will typically subordinate to other financing sources when needed.
Download the Economic Development Loan Fund Application (pdf)
Contact
Contact the Hutchinson Economic Development Authority at 320.234.4223, or email us, for a loan application and additional information.
In all cases the proposed project must pass what is called the “but-for” test, meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. In other words: if the project can be done without TIF, then it is ineligible for this assistance.
For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings.
Different rules apply to each type of TIF district (see below):
- Economic Development TIF District – A 9-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for industrial-type projects.
- Redevelopment TIF District – A district that can go up to 25 years and will provide funds for the removal of blighting conditions on a lot (sub-standard buildings, site clean-up, etc.).
Eligibility
- The Hutchinson City Council, following a public hearing on the proposed project, must approve all TIF Districts.
- Economic Development TIF
Industrial, warehousing, research & development and call centers are eligible. - Redevelopment TIF
• Proposed district must contain existing “blighted” development
• At least 70% of the area must be occupied by buildings or other improvements.
• At least 50% of the buildings themselves must be substandard, based upon an internal inspection.
• A building is considered substandard if it would cost at least 15% of a new building to bring the existing building up to current building code requirements.
• As long as the above requirements are met, any type of project (commercial, retail, industrial) is eligible.
Requirements
- Economic Development TIF
• The TIF district must promote new employment, tax base or retain business in the state. - Redevelopment TIF
• At least 90% of the tax increment generated must be used to correct the blighting conditions.
Rates/Terms
- All TIF districts in the City of Hutchinson will be set up on a “pay-as-you-go” basis – meaning that tax increment will flow back to the developer in semi-annual payments.
- If the project requires “up-front” financing, a loan may be secured from a private lender, with the projected tax increment being pledged to service the loan.
- Economic Development TIF
• Districts can provide tax increment for up to 9 years. - Redevelopment TIF
• Redevelopment TIF district can provide tax increment for up to 25 years.
Contact
For additional information about Tax Increment Financing, contact the Hutchinson Economic Development Authority at 320.234.4223, or email us.
In addition, the availability of tax abatement is limited – in any given year, for all economic development projects taking place, the city can abate an amount equaling no more than 10% of its current tax levy.
The Hutchinson City Council must approve all tax abatements.
Eligibility
- Tax abatements can be provided for any type of property.
Requirements
- The project must provide one or more of the following public benefits: it must increase or preserve tax base, result in job creation, redevelop blighted areas, and / or provide services not currently available to the residents of Hutchinson.
Rates/Terms
- Taxes can be abated for up to 15 years (in some instances 20 years).
Contact
For additional information about Tax Abatement, contact the Hutchinson Economic Development Authority at 320.234.4223, or email us.
Eligibility
- Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
- Total debt (including this loan) secured by the property cannot surpass 100% of the assessor’s estimated market value, or the appraised value of the property, whichever is greater.
- Eligible exterior improvements include windows & doors, painting & other façade improvements, roofs, foundations, lighting, accessibility improvements, parking lots and landscaping.
- Eligible interior improvements include general remodeling, HVAC, electrical, plumbing and handicap accessibility.
- Funds cannot be used for security systems, equipment or furniture.
Requirements
- No more than 30% of the loan can be used for interior improvements other than heating, electrical, plumbing, insulation, handicap accessibility and asbestos abatement.
- Loans are immediately due if the property is sold or otherwise transferred.
- All owners must join in the application.
- All loans must be secured by a mortgage on the property.
- A personal guarantee is also required.
- There is a $200 application fee.
Rates/Terms
- The minimum loan amount is $5,000.
- The maximum amount available is $60,000 although larger amounts will be considered.
- Interest rates are fixed.
Two options are available for interest rates and loan terms:
- For loans less than $10,000, the term is 7 years at the current prime rate.
- For loans $10,000 or greater, the term is 10 years at the current prime rate.
Download the Downtown Commercial Rehabilitation Loan Application (pdf)
Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at 320.234.5652, or email us.
Eligibility
- Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
- Applicants must provide a personal dollar-for-dollar match for the grant amount awarded.
- Only one grant per building will be awarded during any given 5-year period.
- Additions, new buildings, decks and playground equipment are not eligible.
- Eligible improvements must be viewable from the public right-of-way and may include windows & doors, painting & other façade improvements, exterior lighting and landscaping.
Requirements
- Any improvements must be completed and inspected prior the disbursement of any grant funds.
- Work cannot commence until the grant is approved by the EDA Board of Directors and should be completed within 120 days, weather permitting.
- Invoices must be submitted in order to receive reimbursement.
Rates/Terms
- Matching grants range from $500 to $7,500.
Download the Downtown Façade Improvement Program Application
Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at 320.234.5652, or email us.
Eligibility
- Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
- Funds can be used only for the repair, improvement, addition, or replacement of signs and/or awnings.
- Only one grant per business will be awarded during an 8 year period.
Requirements
- Businesses who lease space must submit an application that has been completed by them AND the property owner.
- Work cannot commence until the grant has been approved, and should be completed within 120 days, weather permitting.
Rates/Terms
- Grants range from $500 to $2,000.
- Improvements must be completed before any grant funds can be disbursed.
Downtown Sign & Awning Program Application (pdf)
Contact
For additional information or an application, contact the Hutchinson Economic Development Authority at 320.234.5652, or email us.
MID-MINNESOTA DEVELOPMENT CORPORATION
The mission of the Mid-Minnesota Development Commission is to provide technical assistance to government, businesses and local organizations; administer state and federal programs, and coordinate multi-jurisdictional activities to maintain or enhance the quality of life in the Counties of Kandiyohi, McLeod, Meeker and Renville.
To that end they have created a revolving loan fund utilizing federal dollars to assist businesses within the four county area.
- Business must be “for-profit”
- Must be located in McLeod, Meeker, Kandiyohi or Renville County
- Must have a demonstrated need for gap financing
- Manufacturing, Retail and Service businesses are eligible
Requirements
- Job creation is required, preferably 1 job per $10,000 of funds provided
- Funds can be used for real estate, equipment and / or working capital
- Amount of loan is generally limited to no more than 1/3 of the total project cost.
- At least 10% owner equity is preferred, though not always required.
Rates/Terms
- Loan amounts range from $5,000 to $100,000
- Interest rates are determined on a case-by-case basis and may as low as 2% below Prime.
- Typical loan terms are:
• Working Capital – 5-year maximum
• Machinery & Equipment – 5-year balloon
• Real Estate – Up to 10-year term with up to 20-year amortization - A $25 application fee and a 1% origination fee is required.
- Applicant pays all closing, legal and filing fees at the time of closing.
Contact
Contact the Hutchinson Economic Development Authority at 320.234.4223, or email us, for additional information. Otherwise you can get in touch with:
Les Nelson
Mid-Minnesota Development Commission
333 West 6th Street
Willmar, MN 56201
Phone: 320.235.8504
E-mail Les
SOUTHWEST INITIATIVE FOUNDATION (SWIF)
The Southwest Initiative Foundation (SWIF) is a regional foundation funded both by the McKnight Foundation and regional partners from throughout southwestern Minnesota. One of SWIF’s primary goals is to promote community and economic development in the 18 county area.
To help make southwest Minnesota a highly productive, engaged and growing region, the Southwest Initiative Foundation has a number of loan programs available for growing businesses and for facilitating community development projects.
Applicants are encouraged to call or visit the Southwest Initiative Foundation at an early state in the development of their business to complete a needs assessment. This will help determine the level of assistance needed and the overall feasibility of the project.
Assistance is available in both Spanish and Somali.
Eligibility
- Businesses must be for-profit and create or retain jobs that provide a livable wage with benefits, generate new wealth for the region and diversify the economy of southwest Minnesota.
- Applicants must have adequate cash-flow to service debt, compliment SWIF’s loan with lending from the private or public sector and be committed to the 18-county region.
Requirements
- Funds can be used for machinery & equipment, inventory, working capital and real estate.
- Adequate collateral is required on all loans.
Rates/Terms
- Maximum loan amount of $200,000.
- Loans up to $400,000 are available for renewable energy, food & agriculture, bio-science and manufacturing projects.
- Interest rate determined using a risk-opportunity analysis, loan terms and current market rates.
- Term of loan is based on the life of the asset, but generally will be five years. If amortized beyond five years a balloon payment may be required.
- Loans may be subordinated to the primary lender bank.
- There is a 1% loan origination fee and all costs associated with the loan are the responsibility of the borrower.
Download the SWIF Loan Program Application (pdf)
Contact
Amy Woitalewicz
Business Finance Director
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: 800.594.9480
E-mail Amy
Eligibility
- Both start-up and expansion projects are available.
- Projects must be located within SWIF’s microenterprise service area which includes the 18 counties of southwest Minnesota plus Benton, Carver, Sherburne, Stearns and Wright counties.
- Industry sectors include manufacturing, service, retail, child care and value-added agriculture.
Requirements
- Funds can be used for start-up expenses, equipment, inventory, furniture & fixtures, working capital and real estate.
- All loans are collateralized with business and / or personal assets.
- Program requires equity into the project.
- Borrower will be responsible for loan filing and loan closing fees.
- A personal guarantee from the borrower is required.
Rates/Terms
- Loans up to $50,000 are available.
- Interest rate is fixed at 7.5%
- Loan terms up to 10 years for real estate and 6 years for equipment.
Download the SWIF Loan Program Application (pdf)
Contact
Jackie Turner-Lovsness
Program Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: 800.594.9480
E-mail Jackie
Eligibility
- Businesses must be located within SWIF’s microenterprise service area which includes the 18 counties of southwest Minnesota plus Benton, Carver, Sherburne, Stearns and Wright counties.
Requirements
- Funds may be used for software, hardware (including computers, peripherals, tablets and smart phones), website, social media & computer training.
- Client must be able to describe how the funds would be used and why it will help their business grow.
Download the SWIF Loan Program Application (pdf)
Contact
Microenterprise Loan Program
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: 800.594.9480
E-mail SWIF
PRAIRIELAND ECONOMIC DEVELOPMENT CORPORATION
The Prairieland EDC is a nonprofit corporation set up to contribute to the economic development of Southwest Minnesota. As a 504 Certified Development Company (CDC), Prairieland EDC works with the Small Business Administration and private sector lenders to provide financing to small businesses.
Through the SBA 504 Loan Program, Prairieland provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.
Typically, a private lender will provide 50% of the project financing while 40% is funded by a debenture guaranteed by the Small Business Administration. The remaining 10% is equity provided by the borrower. The extent of the SBA’s participation is usually $1,000,000 although $1.3 million may be available under certain circumstances.
- To be eligible, the business must be operated for profit, have a tangible net worth of less than $7 million, and have an average net income that is less than $2.5 million after taxes for the preceding two years.
Requirements
- Loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.
- Funds cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.
- 1 job must be created for every $35,000 received.
Rates/Terms
- Interest rates are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.
- Terms of 10 or 20 years are available.
- Fees typically total 3% of the debenture.
Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or email us for additional information. Otherwise you can contact:
Ann Peterson
Prairieland EDA
1 Prairie Drive
Slayton, MN 56172
Phone: 507.836.6656
E-mail Ann
MINNESOTA DEPARTMENT OF EMPLOYMENT & ECONOMIC DEVELOPMENT (DEED)
Eligibility
- Cities, counties & townships can apply for funding on behalf of an expanding business.
- Grants are awarded to local governments who, in turn, make loans to qualified businesses.
- Funds cannot be used for retail businesses, industrial park development or working capital.
Requirements
- Funds must be used for land, buildings, equipment or training costs.
- Funds may also be used for infrastructure improvements to support businesses.
- MIF participation is limited to 50% of total project costs (most projects selected for funding have at least 70% of their financing coming from other sources)
- Jobs created must pay at least $10.25 / hour cash wages and $11.21 / hour including benefits (defined as life, health, dental insurance plus profit sharing and retirement contributions)
- 51% of created jobs must go to “low-to-moderate income” people.
- Job creation requirements also exist, based upon the amount of assistance provided (generally 1 job per $5,000 in assistance)
Rates/Terms
- Up to $500,000 is available.
- Interest rates are negotiated
- Term is up to 20-years for real estate and 10-years for machinery & equipment.
Contact
Contact the Hutchinson Economic Development Authority at (320) 234-4223, or email us for additional information.
The Job Creation Fund (JCF) provides financial incentives to new and expanding businesses that meet certain job creation and capital investment goals.
Companies deemed eligible to participate may receive up to $1 million for creating or retaining high-paying jobs and for constructing or renovating facilities or making other property improvements.
In some cases, companies may receive awards of up to $2 million.
Eligibility
Businesses engaged in:
- Manufacturing
- Warehousing
- Distribution
- Technology-related industries
- Other eligible activities
Companies must apply through the City.
Requirements
To be approved for JCF a business must, at minimum:
- Be engaged in an eligible business activity.
- Obtain local government support for their project via council resolution.
- Invest at least $500,000 ($250,000 for Targeted Populations*) in real property improvements within one year of becoming a designated Job Creation Fund business.
- Create at least 10 (5 for Targeted Populations*) new full-time permanent jobs within two years of becoming a Job Creation Fund business while maintaining existing employment numbers
- Pay at least $13.61 in wages and benefits in 2020, adjusted annually based on 110 percent of federal poverty guidelines. The level will change again on Jan. 1, 2021.
- Have other location options outside of Minnesota.
- Cause no undue harm to Minnesota business competitors.
- Certify that the project would not occur without Job Creation Fund assistance.
Projects that begin prior to becoming designated by DEED are not eligible for the Job Creation Fund.
Projects that receive $200,000 or more in Job Creation Fund assistance are subject to prevailing wage requirements.
Rates / Terms
Companies meeting eligibility requirements must sign a business subsidy agreement with the Minnesota Department of Employment & Economic Development (DEED) to meet job retention, creation, wage, and capital investment requirements.
The following benefits may be available once a business meets the conditions of its agreement and provides proof of performance:
- $1,000 ($2,000 for Targeted Populations*) per year per job created for jobs paying at least $28,427 in cash wages
- $2,000 ($3,000 for Targeted Populations*) per year per job created for jobs paying at least $38,263 in cash wages
- $3,000 ($4,000 for Targeted Populations*) per year per job created for jobs paying at least $49,194 in cash wages
- Up to a 7.5% rebate for real property improvements for a business located in Greater Minnesota
*A targeted population is defined as if the business is located in Greater Minnesota or if 51% of the business is cumulatively owned by minorities, veterans, women or persons with a disability.
Contact
Contact the Hutchinson Economic Development Authority at 320.234.4223, or email us for additional information.
Eligibility
- Manufacturing and industrial businesses located or intending to locate in the state are eligible.
- The company must meet the Small Business Administration definition of a small business to be eligible under this program – generally firms with less then 500 employees meet this criterion.
Requirements
- Project must create a “significant” number of new jobs.
- Funds can be used for land, buildings, machinery & equipment and project administration costs.
- Working capital and debt refinancing are not eligible.
- At least 20% of project costs must be privately financed through equity (25% is required for equipment)
- First position on real estate or equipment is required along with personal guarantees of the owners. Other security may be required.
- Bond issuance costs of 4% are capitalized with the loan principle.
- 10% of the bond issue must be escrowed.
Rates/Terms
- Amounts from $500,000 to $6 million are available.
- Rates are fixed and are determined by the market rate for similar securities at the time the bonds are sold.
- Term is up to 20 years for real estate and 10 years for equipment, not to exceed 80% of its useful life.
Contact
For additional information, contact the Hutchinson Economic Development Authority at 320.234.4223, or email us.
Eligibility
- Businesses located or intending to locate in any of Minnesota’s 80 non-metro counties are eligible.
- Business start-ups or expansions are eligible.
Requirements
- Projects must create or retain jobs for low income individuals.
- A financing gap must exist.
- Cash flow must be sufficient to cover the projected debt service.
- Funds can be used for property acquisition, site improvements, new construction, building renovation, machinery & equipment and working capital.
- Participation is limited to 50% of total project costs (each dollar must be matched by at least one dollar of non-public funds).
Rates/Terms
- Up to $100,000 is available, although loans to retail businesses are limited to $20,000.
- Rates range from 3% to 10%.
- Terms will be consistent with the other sources of project financing.
Contact
For additional information, contact the Hutchinson Economic Development Authority at 320.234.4223, or email us.
At the Minnesota Department of Employment & Economic Development, contact Bart Bevins at 800.657.3858 or Email Bart.
SMALL BUSINESS ADMINISTRATION
Eligibility
- Most types of businesses are eligible as long as they are for-profit and operate in the United States.
- The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast majority of businesses meet this definition.
Requirements
- Funds can be used for real estate, machinery & equipment, inventory and working capital.
Rates/Terms
- $2 million is the maximum loan available under the 7(a) program, although $1 million is the maximum exposure of the SBA under a guarantee.
- For loans of $150,000 or less, the SBA guarantees 85% of the loan
- For loans greater than $150,000, the SBA guarantee is 75%
- Interest rates may be fixed or variable and are negotiated between the lender and borrower subject to SBA guidelines, loan size and the term of the loan
Loan Size | Term | Maximum Interest Rate |
$50,000 or more | More than 7 yrs Less than or equal to 7 yrs |
Prime + 2.75% Prime + 2.75% |
$25,000 to $50,000 | More than 7 yrs Less than or equal to 7 yrs |
Prime + 3.75% Prime + 3.75% |
$25,000 or less | More than 7 yrs Less than or equal to 7 yrs |
Prime + 4.75% Prime + 4.75% |
- Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working capital (although under certain circumstance this can be stretched to 10 years).
- Guarantee fees apply based upon the size of the loan:
Loan Size | Guaranty Amt. |
$150,000 or less$150,000 to $700,000More than $170,000 | 1%2.5%3.5% |
- All loans are subject to a 25 basis point annualized servicing fee on the outstanding balance of the guaranteed portion of the loan.
- Finally, there are penalties for pre-payment
Contact
Most lenders are familiar with SBA loan programs so interested applicants should contact their local lender for further information and assistance in the SBA loan application process.
Eligibility
- Most types of businesses are eligible as long as they are for-profit and operate in the United States.
- The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast majority of businesses have no trouble meeting this definition.
Requirements
- Funds can be used for real estate, facility expansion or conversion, machinery & equipment, inventory & supplies, working capital, to purchase an existing business and to refinance existing business debt that is not already structured with reasonable terms & conditions.
- Loan proceeds cannot be used to effect a partial change of business ownership, to reimburse funds owned to an owner, to pay delinquent taxes or for any unsound business purpose.
Rates/Terms
- Maximum loan amount is $350,000
- Interest rates are negotiated between the borrower and lender, may be fixed or variable, depend upon the size of the loan and are tied to the prime rate.
Loan Size | Maximum Interest Rate |
Over $50,000$50,000 or less | Prime + 4.5%Prime + 6.5% |
- There is a 2% guaranty fee for loans up to $150,000 and a 3% guaranty fee for loans over that amount.
- Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working capital (although under certain circumstances this can be stretched to 10 years).
- Collateral may not be required for loans up to $25,000 – the bank making the actual loan makes this determination.
Contact
SBA Express loans are arranged through your local lender.