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
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Guidelines for Financial Assistance
Please review the information below before requesting a pre-application form.
- Taconite Assistance Area (TAA)
- Eligible Businesses
- Ineligible Businesses
- Types of Financial Assistance Available
- Allowable Use of Proceeds
- Application Process
The IRRRB Business Development financing programs exist to assist new or expanding private sector businesses to create and maintain productive, permanent, skilled employment in the Taconite Assistance Area. Businesses who wish to apply for funding under this program are required to comply with Minnesota State Law and IRRRB policy regarding prevailing wage.
Taconite Assistance Area (TAA)
To qualify for assistance under the IRRRB Business Development financing programs, 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.
ISD#
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
IRRRB 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, IRRRB 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: IRRRB 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 IRRRB 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 IRRRB. (The interest rate on the bank portion of the loan is a matter to be negotiated between the business and the bank.)
Direct Loans: IRRRB 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 IRRRB.
Loan Guaranties: IRRRB 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: IRRRB 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.
The following are allowed uses for IRRRB financing:
- Land and Building Acuisition
- Building Renovation
- Land Improvements
- Machinery/Equipment Purchase
- New Building Construction
- Inventory Purchase
However, if a project involves construction, the agency will participate only in permanent term financing. Interim construction lending must be financed via another lender. Program financing cannot be used for debt refinancing or acquisition of an existing business. To request that a Business Development Team member contact you, click here.
