With Minnesota small businesses reeling from the coronavirus pandemic and accompanying closures, Gov. Tim Walz signed an executive order Friday that could provide much needed assistance.
The new loan program was created under the governor’s Small Business Assistance Executive Order, issued Monday. Utilizing $30 million in special revenue funds, the program will provide a short-term funding solution for businesses most in need. Under the guidelines of the new program, loans of between $2,500 and $35,000 will be made to qualifying small businesses. Should federal loan programs or other financing become available, businesses would be expected to repay the loan.
Faribault Area Chamber of Commerce and Tourism President Nort Johnson encouraged small, local businesses to consider applying soon given the limited funding. However, some of those businesses are holding off on making decisions for now, hopeful that they can reopen soon.
Kelli Sackett of Sisters Salon in Owatonna is among those small business owners. The governor’s order forced Sackett to close up shop last Wednesday. Prior to that, she said she hadn’t seen a significant drop in customer traffic.
“For every person who cancelled because they weren’t comfortable coming in, the phone would ring right after with somebody who wanted to get in,” she said. “It was an abrupt cutoff.”
Sisters Salon remains partially open, selling shampoo, gel and other hair products, but can’t take any haircut or styling appointments. For now, Sackett said that she hopes that will change very soon, but acknowledges that she might need to look into other options.
“We haven’t looked too far into (state or federal loans) yet because we’re waiting to see how long this goes on for,” she said. “But any help we can get for a small business is helpful.”
Some businesses may be interested in the Small Business Administration’s Disaster Relief loan program. While such loans are not forgivable, their interest rate is capped at 4% their term at 30 years, and qualifying businesses can receive up to $2 million.
By contrast, the loans issued by the state are much smaller but carry no interest and are 50% forgivable. DEED estimates the new program could support anywhere from 1,500 to 5,000 small businesses across the state.
Another provision of the executive order could open up an additional $28 million in credit to local businesses, according to DEED. That provision would allow local governments and lending partners to provide small business loans from their revolving loan funds for the next 90 days.
The state’s new loan funding isn’t available quite yet, but should be by the end of the week. Once it’s ready, it will be doled out through DEED’s approved network of 23 lenders, which includes the Southeast Minnesota Initiative Foundation.
Faribault Community and Economic Development Director Deanna Kuennen said that she is very pleased that the state has taken an active approach to helping businesses hit hardest by the pandemic.
“This is an unprecedented time for our local business community,” Kuennen said. “In order to get through this, all agencies will need to step up.”
Kuennen has stayed in contact daily with DEED leadership and other economic development officials across the state. While the situation changes day to day, she promised to continue providing important information for local businesses.
For the loan program specifically, Kuennen said a one-page flier would be posted on the city’s website later this week. The Faribault Area Chamber of Commerce and Tourism has already advertised the program on its website, faribaultmn.org, and in conversations with small businesses.
Johnson said that the terms of the loan make them an especially attractive option for local small businesses. He noted that any business affected by the governor’s order could receive funds, not just those that were closed by it.
“We are pleased to see that DEED is looking out for our existing small businesses,” said Johnson. “They are the backbone of our economy, and we want to make sure they have every opportunity to survive this pandemic.”