Lending Guidelines

The Initiative Foundation’s gap-lending program focuses on economic development opportunities in Central Minnesota.

Eligibility Criteria

• Financial participation by local lender is required
• Demonstrated management skills, industry experience and financial aptitude
• Sound business plan with financial projections
• Adequate cash flow to service debt
• Ability to secure loan with tangible collateral
• Creation or retention of living-wage jobs with employee benefits
• Contribution to the region’s economic competitiveness
• Committed to and located in the Initiative Foundation’s 14-county service area that includes two Native nations

Use of Funds

• Building acquisition
• Expansion
• Machinery/Equipment
• Inventory
• Working Capital
• Loan Terms

Application Process

• Business loan application
• Current business plan
• Two years of business financial statements (existing businesses)
• Two years of business income tax returns (existing businesses)
• Cash flow projections for 24 months
• Personal financial statement(s) of the principal owners
• Two years personal income tax returns of the principal owners

Loans will be considered up to $500,000. Interest rates mirror market rates and are determined on a case-by-case basis. Loans need to be fully secured and may be subordinate to the security interest of a bank as primary lender. Personal guarantees and assignments of life insurance equal to the amount of the loan are generally required Loan recipients will be charged a 1 percent origination fee and all costs of filing, credit reports, searches and attorney fees incurred must be paid at closing.

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Eligibility Criteria

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Use of Funds

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Application Process

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Loans will be considered up to $XXX,XXX. Interest rates mirror market rates and are determined on a case-by-case basis. Loans need to be fully secured. Personal guarantees and assignments of life insurance equal to the amount of the loan are generally required. Loan recipients will be charged a 1 percent origination fee and all costs of filing, credit reports, searches and attorney fees incurred must be paid at closing.

Loans are available for startup or existing Central Minnesota businesses owned and operated by residents who are BIPOC, low-income persons, women, veterans and/or persons with disabilities.

Eligibility Criteria

• Successful completion of the Initiative Foundation’s Enterprise Academy with a demonstrated need for financing through a sound business plan
• Projects must demonstrate sufficient income to repay the loan within an appropriate time frame
• Demonstrates good character and a strong commitment to a business plan
• Demonstrates an inability to obtain sufficient financing from a traditional lender

Use of Funds

Startup and expansion costs, including normal expenses such as machinery and equipment, inventory and receivables, working capital, new construction, renovation, and site acquisition. Financing of existing debt is not permitted.

Loan Terms

• Interest rates determined on a case-by-case basis
• Faith-based financing available
• Sufficient collateral required
• Personal guarantees are generally required with business entity

Application Process

• Loan application
• Current business plan
• Cash flow projections for 24 months
• Personal financial statement(s) of the principal owners
• Two years of personal income tax returns of the principal owners
• Two years of business financial statements and income tax returns (existing businesses)

Loan recipients are charged a $100 processing fee that must be paid at closing along with all costs of searches, credit reports, filings and legal fees

The help ensure a resilient nonprofit sector, the Initiative Foundation provides financing up to $100,000 to eligible nonprofit organizations for the creation or expansion of mission-related activities.

Eligibility Criteria

• Any 501(c)(3) nonprofit organization in the Initiative Foundation’s 14-county service area is eligible to apply
• Loan terms, covenants, reporting, insurance requirements and other matters are determined on a case-by-case basis

Use of Funds

• Loans can be used for working capital, equipment acquisition and/or facility improvements
• Loans require a clearly defined business plan
• Loans are available to eligible nonprofit organizations of different sizes and fields of service including, community development; human services; health care; housing; education; environmental; arts and humanities.

Application Process

• Borrower agrees to provide financial and other information to the Foundation from which the Foundation can make a credit determination.
• Borrower agrees to complete an employment report at inception of the loan and annual employment surveys by Dec. 31 each year, for the term of the loan.
• Borrower agrees to comply with the Foundation’s request for financial statements and/or progress reports from time to time and at least annually for the term of the loan.

The borrower will pay a 1 percent origination fee, plus other third-party expenses for documentation, recording, etc. Lending decisions generally are made within five to 10 business days from the date the Initiative Foundation receives the application and all supporting materials.