Capital Acquisition Loans

The Capital Acquisition Loan Program enables small business owners to purchase and rehabilitate small commercial and industrial properties. The City of Minneapolis, through this program provides financing in tandem with private banks for projects of up to approximately $1 million. The lender finances at least 50 percent of the project, the City finances up to 40 percent, and the business borrower provides the remaining funds in the form of equity. The City’s participation is capped at $400,000, but there is no limit on the bank’s share.

How is the program funded?

CAL is funded through a loan purchase agreement with the Community Reinvestment Fund (CRF). CRF injects funds into the CAL program by purchasing the City’s share of each loan. Because CRF purchases loans for resale on the secondary market, CAL loans must be priced to yield a market return for investors.

Who is eligible for loans and how can they be used?

Small business owners seeking to purchase property in which to operate their business in the City of Minneapolis are eligible for financing through this program. No geographical restrictions within Minneapolis apply to the program. The business must occupy at least 25 percent and in some cases 51 percent of the space. Loans can be used to:

  • Acquire commercial and/or industrial properties
  • Rehabilitation of commercial/industrial properties in conjunction with property acquisition. If rehabilitation is involved, the private lender must provide the construction financing and the City will provide the 40% in the form of permanent financing and the time the construction has been completed.
  • Acquire and rehabilitate mixed commercial/residential buildings when at least 50 percent of the floor space is used for commercial purposes
  • Refinance contracts-for-deed for commercial/industrial properties.

Loan terms and conditions

  • Up to 20 year amortization
  • Interest rate varies with market conditions
  • All loans are secured by a second mortgage on the property being financed.
  • 1% origination fee on City’s portion of the loan is due at the time of closing

Application process

Loan applicants should return a completed loan application with the following information:

  • Prior two year business financials and tax returns.
  • Business owners’ personal financial statement and prior two years tax returns
  • 12-month cash flow projection
  • Business plan (if available).

Applications to or for more information, contact Nila McDonald at (612) 673-5189.
CPED/Business Finance
105 – 5th Avenue South, Suite 200
Minneapolis, MN 55401

All programs and guidelines are subject to change without notice. 
Online information from the City of Minneapolis at www.ci.minneapolis.mn.us/cped
Updated September 25, 2008