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NGExpert financial copywriter
Page written by Chris Godfrey. Last reviewed on June 28, 2024. Next review due October 1, 2025.
Business grants are effectively free money – there’s no need to repay the funds if you use them as you said you would – and they’re a great way for Minnesota entrepreneurs to launch or finance a business or create opportunities to support their community.
Provided by Government departments, corporations, foundations and other organizations, small business grants deliver funding that can be used to support business opportunities, or initiatives in the arts, education, research and more. However, Minnesota business owners seeking a business grant should expect a lengthy application process, typically needing to meet strict guidelines, timelines and other qualifying criteria. Competition for this type of funding is often fierce and even if you qualify, the award sum may be small requiring you to seek additional finance.
Be aware that many business grants are also tied to specific goals – entrepreneurial, educational, creative and motivational – and selection committees have full control of the award process and the sums distributed. To succeed, you will usually need a strong business plan that includes a feasibility study and an indication of how you intend to keep the venture going in the post-grant period.
Lastly, if you receive an award, the money may come to you all at once, but more usually, it will come in stages – either based on a set calendar or on your venture achieving fixed objectives. Unlike business loans, grants do not need to be repaid, making them a critical financial resource for ventures that cannot sustain a large financial burden.
Minnesota has no shortage of small business grants and they come in many shapes and sizes, which means finding the right grant for you may require some homework. Here are the best places to begin your search:
Offered by the US Department of Agriculture, the Minnesota Rural Business Development grant program aims to improve the rural community by providing funds to create jobs and deliver economic benefits and technical advancements. If your business is based in the state and it provides goods or services that could support this mission, you may be eligible for a grant from a pot that sets no limit on award amounts, (although smaller awards do take priority). Grants may be made to a public body/government entity, an Indian tribe, or a nonprofit entity that primarily serves rural areas. The grant money must be used for projects that benefit rural areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.
The Southern Minnesota initiative foundation (SMIF) economic impact grant program offers up to $20,000 to companies that are creating infrastructure to help develop the region’s economic prosperity. While not limited to these areas, the SMIF gives tourism, the arts, food accessibility, and business services as examples of eligible initiatives.
Although it does not provide direct grant funding, the Minnesota Department of Administration provides a grants management hub and a database of grants available by sector, which makes it a great place to start your search for money. Find grants for science and technology projects, educational initiatives, disaster prevention schemes, housing projects, health programs and many, many other topics. Award sums and qualifying criteria vary by category.
The Minnesota Department of Agriculture offers a twin resource hub to the Department of Administration’s grant directory. Once again you’ll find a wide array of grants specific to the agricultural industry and of keen interest to ranchers and farmers.
MORE: Find other business grants for farmers.
Minnesota Grantwatch also operates a directory of current grant opportunities, although not all may be specific to Minnesota-based organizations. Up to 2,000 grants may be available at any one time, with award values and qualifying criteria varying by category and mission goal.
The WomensNet Amber Grants awards multiple grants per year to women wishing to start or grow their own business. $10,000 is offered monthly in three separate categories (total of $30,000 per month available). Participants who win a monthly prize also automatically qualify for the draw for an annual $25,000 award – with three prizes available, one for each award category. You can apply for any of these grants by completing an online application and paying a $15 entrance fee.
MORE: Discover other grants for women, black women and minorities.
Business loans may provide an alternative source of funding for your business or new venture. Online lenders will typically be the best option for this type of financing, but you may pay higher interest rates and fees than you would with traditional banks. Credit checks are standard with most commercial financing, but depending on the type of loan you choose, you may not need to provide collateral:
Term loans are the most common type of commercial loan. You receive a single, lump-sum cash injection and then pay it back in regular installments over a fixed period of up to 25 years. Collateral may be required.
A business line of credit is a business loan that functions like a high-value credit card. Borrowers can withdraw as much as they want when they want from a loan facility up to the limit of their borrowing. You only pay interest on the sums you withdraw, not the whole credit line. This can significantly reduce your borrowing costs. Collateral may be required.
Also known as account receivables financing. Borrow against the value of your unpaid invoices. The lender will usually provide up to 95% of the invoice value within a few days or even hours of the bill being raised. Your invoices act as security for the loan, no added collateral required.
Equipment loans use the asset you’re financing as security – no added collateral is required. You use the equipment as you pay for it and the lender maintains a lien on the machinery. Once you pay the loan back, the lender releases the lien, and you own the equipment outright.
Merchant cash advances are designed for businesses that accept customer payments by credit and debit card. You borrow against the value of your card sales. As your card sales increase, your borrowing limit goes up. Pay the loan back with a fixed percentage of your card sales on a daily, weekly or monthly basis. Your sales act as security for the loan, no added collateral is required.
Revenue-based financing functions like a merchant cash advance but with higher borrowing limits. Based on the size and regularity of their total revenues, (not just their credit card sales), businesses may receive a lump sum and pay it back over a short-term schedule, typically by small deductions from their daily sales. This type of loan can usually be secured quickly as qualification rules are less intensive and credit scores are not so critical. No added collateral is required.
Nonprofit and community-based lenders can provide SBA Microloans to business owners who may struggle to secure standard business financing. Available up to $50,000, SBA microloans also come with more relaxed qualifying rules and can usually be secured with FICO scores as low as 500, or even with no credit score at all. Be aware that these type of business loans often require a personal guarantee that makes you personally responsible for the debt.
Working with business finance experts can make all the difference when applying for grant funding. Contact Swoop to discuss your borrowing needs, get help with your application and compare top quality small business grants and business loans from a choice of providers. Give your business the chance it deserves. Register with Swoop today.
Written by
Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.
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