Loans

Loan assistance from LEDC is available to small and medium-sized businesses located in the state of Minnesota. Eligible borrowers include individuals, partnerships, corporations, and cooperatives. The money for the loan fund may come from different sources; some of those sources limit where, geographically, the funds can be used.

 

LEDC has four loan products:

 

Type of Loan Purpose Minimum Maximum
Microenterprise Start or expand very small businesses $2,000 $25,000
CREDO (community real estate development opportunities) Purchase or improvement of real estate by growing businesses $25,000 $125,000
Cooperative Start or expand a cooperative enterprise $4,000 $25,000
Co-op member share loan Finance the purchase of a share in a co-op by an existing or proposed co-op member $2,000 $10,000

 

Interest Rates and Terms

Interest rates for loan range from 0% to the lesser of 10% or the maximum permitted by law depending upon the requirements of dedicated funding sources as well as market conditions and risk.  Loan terms are generally three to five years, fully amortizing.  Longer terms and/or amortizations are available for a limited number of transactions, primarily for real estate financing.

 

How an applicant may use the funds: How an applicant may not use the funds
  • Inventory
  • Equipment
  • Real estate
  • Leasehold improvements
  • Building rehab
  • Working capital
  • Purchase of a business or franchise
  • Purchase of a share in a business such as a cooperative
  • Refinance of existing debt at more reasonable rates and terms
  • In very limited circumstances, refinancing the payout of a departing business partner
  • Financing the payout of a family member departing from the business
  • Payment for educational purposes unless directly tied to an immediate business income opportunity
  • Personal expenses
  • Construction financing
  • Gambling businesses
  • LEDC does not fund X-rated businesses, selling drug paraphernalia, or usurious money services.

 

Documentation required from clients:

1) A business plan covering the information listed in the orientation packet and any other pertinent information regarding your business (an example can be found here).

2) Personal financial statement(s) of the owner(s) and/or guarantors of the business (forms found here)

3) Last two years’ personal tax returns for the owner(s) of the business, with all supporting schedules and K-1s.

4) Current balance sheet and year-to-date profit and loss statement for an existing business (additional years may be required).

5) Last three years’ tax returns for corporations and partnerships, with all supporting schedules.

6) Monthly cash flow projections for one year, and quarterly for 2nd year and 3rd year.

7) Certificate of Assumed Name from Secretary of State.

8) LEDC’s Client Profile Form (Loan application)

9) Copy of owner’s driver’s license (or another personal identification)

You may also download LEDC’s Loan Application here.

 

Other information that may be needed:

  • Copy of LLC agreement.
  • Resumes of all principals in the business.
  • Certificate of Corporate Good Standing with Secretary of State.
  • Partnership Agreement.
  • Proof of business insurance.
  • Copy of business lease.
  • If no credit history, two letters of credit reference.

 

For more information regarding LEDC’s Loan Program, contact Rocio Bustillos at rocio@ledc-mn.org