SECTION HIGHLIGHTS
Financial Assistance
Read about our business incentives for moving your business into the northland.
financial | workforce | tax-free zone
Serving the Iron Range and northeastern Minnesota
Guidelines & Pre-Application
Please review the information below before submitting your pre-application form.
- Taconite Assistance Area (TAA)
- Eligible Businesses
- Ineligible Businesses
- Types of Financial Assistance Available
- Allowable Use of Proceeds
- Application Process
- Review Process
- Review Criteria
Taconite Assistance Area (TAA)
To qualify for assistance under the Iron Range Resources Business Development Financing Program, the new development or business expansion must be located within the Taconite Assistance Area, defined by the following Independent School District(ISD) numbers. Your county auditor can help you determine whether your proposed business location meets this requirement.
1 Aitkin
166 Cook County
182 Crosby/Ironton
316 Coleraine
318 Grand Rapids
319 Nashwauk/Keewatin
381 Lake Superior
695 Chisholm
696 Ely
701 Hibbing
706 Virginia
712 Mt. lron/Buhl
2142 St. Louis County
2154 Eveleth/Gilbert
2711 Mesabi East
Eligible Businesses
The purpose of this program is to increase, expand and diversify the area's economic base by assisting private investment. Emphasis will be placed on projects that promote manufacturing or innovative technology. Start-up businesses and existing businesses are eligible for assistance. They may be organized as proprietorships, partnerships or corporations. Primary consideration will be given to the following types of businesses:
- Manufacturing/Assembly
- Projects which attract expenditures from outside of the TAA
- Technologically innovative projects
Ineligible Businesses
The following businesses are ineligible for consideration:
- Retail/Service
- Media
- Professional Offices
- Construction
- Transportation
- Speculative Real Estate
- Agriculture
- Tourism
Types of Financial Assistance Available
Iron Range Resources financing can be structured to best suit your needs. The agency is limited by law to a maximum of 50 percent participation in eligible financed costs.
With the exception of an equity stock purchase, Iron Range Resources will require the personal guaranty of all owners whose interest in the company is 20 percent or more. Corporate guarantees will be required in instances where a separate corporation owns 20 percent of the company seeking financial assistance from the agency.
Bank Participation Loans: Iron Range Resources purchases a portion of a loan originating with a commercial bank or other regulated lender. A shared first position lien, with the bank or lender, on the financed assets and/or other assets is required. Generally, the maximum participation by Iron Range Resources in any single project is limited to not more than $250,000. However, the interest rate on the agency's purchased participation will be set at a minimum interest rate 3 percentage points less than the full-faith and credit obligations of the United States Government of comparable term to the loan, rounded up to the nearest one-half percent. The minimum rate charged on participation loans is 1 percent. The interest rate is determined at the time the participation loan is approved by Iron Range Resources. (The interest rate on the bank portion of the loan is a matter to be negotiated between the business and the bank.)
Direct Loans: Iron Range Resources loans its funds directly to the eligible business. Collateral requirements are negotiable, but typically the agency will require a first lien on the financed assets and/or other assets. The interest rate will be set at an interest rate one percentage point less than the full-faith and credit obligations of the United States Government of comparable term to the loan, rounded up to the nearest one-half percent. The minimum rate charged on direct loans is three percent. The interest rate is determined at the time the loan is approved by Iron Range Resources.
Loan Guaranties: Iron Range Resources will consider a limited guaranty on a loan to an eligible business that is originated by a commercial bank and/or other lender. Terms and conditions of any guaranty will be negotiated between the lender and the agency.Equity Investment: Iron Range Resources has statutory authority to invest its funds directly into eligible privately owned companies that exhibit extraordinary growth potential. The investment can be in the form of a direct stock purchase or in a convertible debenture. Terms and conditions are negotiable.
Allowable Use of Proceeds
The following are allowed uses for Iron Range Resources financing:
- Land and Building Acuisition
- Building Renovation
- Land Improvements
- Machinery/Equipment Purchase
- New Building Construction
- Inventory Purchase
Application Process
Any business seeking financial assistance from the Iron Range Resources Business Development Financing Program must first submit a completed pre-application form. Please be sure to read and thoroughly understand the guidelines. Development Strategies staff is available to answer questions or address concerns at 218-744-7400 or 1-800-765-5043.
Pre-applications must be submitted to:
Iron Range Resources
P.O. Box 441
4261 Highway 53 South
Eveleth, MN 55734
Attention: Development Strategies Division
After your pre-application is reviewed and approved you will be notified to submit a full application. At that time, the following exhibits will be required.
Exhibit 1: History and Description of the Business
The history and description of the business should be one or two pages describing the history of the company, its product line(s), principals, customers and its legal structure. Keep this exhibit simple and restrict it to the basics.
Exhibit 2: Marketing Plan
Provide a detailed marketing strategy including such items as: a.) Target Market; b.) Competition; c.) Pricing; d.) Distribution; e.) Advertising; f.) Sales Promotion; g.) Independent Market Studies; h.) Online sales and marketing.
Exhibit 3: Use of Proceeds
Describe in detail the use of proceeds as summarized on page 3 of the application. Written cost estimates must accompany this exhibit.
Exhibit 4: Impact on Community/Area
Describe how the proposed financing will benefit the community or area in which the business is located. In addition, estimates of annual payroll, local purchases and other economic impacts should be included here. A complete list of all jobs and titles to be created and/or retained should be included, to match Job Generation totals.
Exhibit 5: Project Financing Sources and Commitment Letters
For participation loans a firm commitment from the participating bank stating the terms and conditions of its participation, signed by an officer of the bank, is required. Commitment letters from all funding sources, as summerized on page 3 of the application, must be included here.
Exhibit 6: List of Collateral
Provide a detailed list of all collateral offered from each funding source. Include value and security position to match project financing sources summary on page 3 of the application.
Exhibit 7: Resumes and Personal Financial Statements
Resumes of all principals and key management personnel as well as current, dated and signed personal financial statements from all principals with 20% or more ownership of the compny must be included.
Exhibit 8: Ownership Structure
An itemization of the ownership structure of the business, including names and ownership percentage of all entities that own at least 5% of the company both before and after proposed transaction (minority stockholders owning less than 5% of company can be included collectively and do not have to be disclosed individually).
Exhibits 9,10 and 11 must be prepared in standard accounting format.
Exhibit 9: Financial Statement
Applicant must provide year-end balance sheets, income statements and statements of cash flows for the past three fiscal years. If business has been in existence less than three years, provide all year-end statements.
Exhibit 10: Interim Financial Statements
Applicant must provide a balance sheet and income statement which is less than 90 days old.
Exhibit 11: Projections
All projections must cover a minimum of two complete fiscal years, two (2) years proforma balance sheets, two (2) years projected income statements and two (2) years projected cash flow (monthly and annually).
Exhibit 12: Affiliates
Description of any affiliates or subsidiaries of applicant(s), as well as balance sheets and income statements for past two fiscal years on such affiliates or subsidiaries.
Exhibit 13: Appraisal/Proposed Lease/Purchase Options or Agreements
An independent appraisal will be required for any real estate which is a subject of the proposed financing, or which is offered as a major source of collateral for any project financing arrangements.
Exhibit 14:
Please complete the form entitled Schedule of Business Debts, Contacts, Notes & Mortgages Payable (provided in the application form) and include as Exhibit 14. Obligations listed must be consistant with the interim balance sheet.
Note: Any additional information you feel would be pertinent to this application should be included as one or more appendices labeled alphabetically beginning with the letter "A."
All information contained in the applications is considered to be nonpublic information per Minnesota Statute 13.0, except that the name of the applicant, the dollar amount and form of the financial assistance, the terms and conditions of the proposed financing package and any studies paid for with agency funds become public information at the time when the Iron Range Resources Board review occurs.
Review Process
During the review process, the application:
- will be discussed in detail by an Iron Range Resources representative with the business and the participating bank
- will be reviewed by the Program Manager
- will be reviewed by the Commissioner of Iron Range Resources
- will be reviewed and recommended by the Technical Advisory Committee
- will be presented for review and approval to the Iron Range Resources Board. (The Board review and action usually occurs quarterly. Please contact our office concerning the current funding cycle.)
- will be submitted for the governor's approval and signature
- Ability to Leverage Other Funding Sources
At any point during the review process, the application may be denied or returned to the applicant for further information or clarification.
Review Criteria
Any business seeking financial assistance from the Iron Range Resources Business Development Financing Program will be evaluated on its ability to meet the following conditions and criteria:
- Demonstrated Repayment Ability
- Equity Commitment
- Adequate Collateral Coverage
- Management Capability
- Credit Worthiness of the Applicant
- A Well-developed Marketing Plan
- Ability to Leverage Other Funding Sources
- Ability to Create/Retain Jobs
- Anticipated Economic Impact
- Innovative Technology
- Availability of Funds
