Emerging Entrepreneur Capital Acquisition Loans (CAL)

The City of Minneapolis is partnering with the Community Reinvestment Fund (CRF) and banks, to help newer businesses (two years or newer) purchase and rehabilitate small commercial, multi-use or industrial properties in the City. Large production or research equipment may also qualify. The City may lend up to $400,000, or 40 percent of the appraised value. A bank finances 50 percent (or greater) and holds a first mortgage. Equity of 10 percent is required. Underwriting standards are slightly more lenient then conventional commercial loans. A minimum debt service ratio of 1.1 to 1 for the last two years is required. There can be no late payments by the business or any of the owners for the past year.

Who is eligible for an Emerging Entrepreneur CAL?

Small commercial and industrial businesses located in or moving to Minneapolis are eligible. The borrowing business must occupy at least 51 percent of the space.

Loans may be used to:

  • Acquire and improve commercial and/or industrial properties.
  • Finance rehabilitation of commercial or industrial properties in conjunction with property acquisition.
  • Refinance contracts-for-deed for commercial or industrial properties in conjunction with acquisition.
  • Finance new fixed equipment.

Loan terms and conditions

  • Up to 20-year amortization.
  • Interest rate on the City’s portion is marked to US Treasuries. The bank charges a normal commercial rate, with a seven-year balloon.
  • All loans are secured with mortgages on the property and by personal guarantees of the owner(s). The City’s loan is subordinate to the lender’s first position.
  • There is a $500 document preparation fee and a 1 percent origination fee charged on the City’s portion. A 1.50 percent prepayment penalty applies on the City’s portion. The bank charges its normal commercial loan fees. Overall fees are less then SBA 504s.

Application process

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

  • Prior two year’s tax returns for the business
  • Business owners’ personal financial statement and prior two years tax returns
  • 12-month cash flow projections and business plan (if available)
  • An online application is available.

For more information contact Nila McDonald at (612) 673-5189.

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 February 2, 2010