Minnesota Business Financing
The state home to over 10,000 lakes and the largest mall in America is also native to many fortune 500 companies and favorite brands that are used all around the world. Some include Target, General Mills, and 3M to name a few—which means it is home to hugely-popular brands like Post-its and Cheerios originated. Though, what remains to be a powerhouse industry within the state is agriculture and food production. Crops and livestock were among the first industries in Minnesota, as it has rich prairie soils, good growing season and plentiful water resources that have all contributed to its top ranking in food production. Minnesota remains to be overall, the 5th in crop production, 5th in total agricultural production, and 8th in livestock production. To put Minnesota’s influence on agriculture more into perspective, for over 50 years starting back to the late 1800s Minneapolis was known as the “Flour Milling Capital of the World.” As for today, agricultural production and processing in Minnesota alone account for $57.5 billion in sales and more than 147,000 jobs. Additionally, Minnesota ranks eighth in the number of farms—73,300—and 10th in the number of USDA-certified organic farms. As we can see, Minnesota contributes tremendously to the business of agriculture and continues to be home to the nations largest food production companies.
Quick-jump to the following sections:
- Minnesota Term Loans
- Minnesota Secured Line of Credit
- Minnesota Unsecured Line of Credit
- Minnesota SBA Loans
- Minnesota Alternative Loans
- Minnesota Equipment Leasing
- Minnesota Asset Based Financing
- Minnesota Cash Advance
Individually, Minnesota ranks among the top 10 in more than 20 agricultural products. These include sugar beets, turkey, red kidney beans, oats, sweet corn, and soybeans that make up some of the lists. Thus, naturally, the business culture in Minnesota centers around the distribution of agricultural commodities and is home to some of the nations largest food production companies. Among them are Cargill, General Mills, Mosaic, Land O’Lakes, and Hormel Foods. Minnesota also manufactures the tools, equipment, and machinery used to create these products. The Midwest state additionally has many public and private food education and research facilities, primarily found at The University of Minnesota, where it continues to teach and lead in agricultural innovations.
Therefore, with the companies that were mentioned before we can see a trend in conglomerates that contribute to Minnesota’s economy—mostly ranging from agriculture to retail stores. One of the more popular and well-known businesses founded in Minnesota and known to the U.S. is Target. It is the second-largest discount store retailer in the United States, just behind Walmart and has steadily gained momentum since its opening. As of 2017, Target operates 1,834 discount stores throughout the United States, and it includes several different retail formats. With its recognizable bull’s eyes symbol and store color red, it is what consumers most identify with without even saying or seeing the Target name. Moreover, although it classifies as a discount store, it is usually defined as a superstore where you can conveniently buy everything you need in one place. Target continues to be one of Walmart’s biggest competitors today and one of Minnesota’s most successful companies.
On the other hand, we have the company known as Cargill that was founded in Minnetonka, Minnesota back in 1865. It is a global corporation that stands as the largest privately held corporation in the United States regarding revenue, and as a public company, it would rank as number 15 on the Fortune 500 just ahead of AT&T. Cargill services significant businesses with trading, purchasing, and distribution grain and other agricultural commodities stemming from palm oil, steel, and transport, and produce food ingredients such as starch and vegetable oils and fats. It continues to be a family-owned business, and its success is mainly due to reinvestment of the company’s earnings rather than public financing. Specifically, the company also is responsible for 25% of all the United States grain exports and supplies about 22% of the US domestic meat market. Cargill has and continues to contribute to the success of Minnesota’s business economy.
Our last honorable mention is another well-known brand that goes by General Mills. Located in the suburb of Golden Valley, Minnesota it was founded in 1865. The multinational American manufacturer and marketer of branded consumer foods found in retail stores is home to some of Americans favorite products. Some include Betty Crocker, Yoplait, Totino’s, Cheerios, Trix, Cocoa Puffs, and Lucky Charms. It does not stop there; General Mills has a portfolio of products that consist of more than 89 other leading brands in the U.S. and around the world. Thus when observing and looking at the history and current business environment of Minnesota, individuals interested in joining or working in the Midwestern state should take into consideration what has worked, why, and model after their successes.
Types of Minnesota Small Business Loans
Nearly every business will look to obtain some sort of conventional or alternative business funding at some point in time, and Minnesota businesses are no exception. Whether it be to finance a new venture, or working capital to help your growing business thrive, there are plenty of financing options available. Below we will take a look at the most common small business funding options available to Minnesota businesses.
Minnesota Term Loans
With rates starting in the mid-single digits, and terms ranging up to 30 years (depending upon use) a conventional bank term loan is the most-preferred form of financing for Minnesota small businesses. Uses for term loans include general operation purposes like purchasing equipment, hiring employees, making payroll, purchasing supplies and other working capital purposes. But term loans are also used for long-term uses such as acquisitions, and consolidation & refinancing business debt.
Minnesota Secured Line of Credit
If you’re a small business looking for revolving funds (which allow you to access a line of credit to draw funds from whenever you need) you will generally need some sort of business collateral. Most common forms of collateral used to secure a line of credit include real estate, inventory and accounts receivables.
Minnesota Unsecured Line of Credit
With an unsecured loan for a Minnesota small business, you aren’t expected to use your company’s business assets as collateral. Since the financing is unsecured, you will need to have fantastic credit, and must exhibit strong financials that show you clearly have the ability to service the new debt.
|Rates||0% for 12 months|
|Collateral||Not be Required|
Minnesota SBA Loans
What makes a Minnesota SBA loan different than a conventional business loan? As far as the structure, not much is different. The only difference is how much the lender is exposed should there be a default. An SBA loan is simply a conventional loan provided by a bank, but whereas a conventional loan exposes the lender to losses if the Minnesota small business defaults, an SBA loan reduces the lenders’ exposure because the government agrees to cover much of their losses.
Minnesota Alternative Loans
Sometimes a Minnesota small business is profitable, and the owner has decent credit, but that’s not enough to get approved for a conventional business loan. When that is the situation, the next best option is to seek-out alternative financing options. Alternative business loans have decent rates and adequate terms for working capital purposes and require a fraction of the paperwork than a conventional loan.
Minnesota Equipment Leasing
This type of financing used by Minnesota small businesses to acquire equipment is the most common equipment financing option. Equipment leasing allows the Minnesota small businesses to get vital business equipment immediately, without having to wait days and weeks for a loan to complete.
Minnesota Asset Based Financing
Whether it be accounts receivable financing, or factoring of receivables, an asset-based business loan is a preferred form of alternative financing for Minnesota small businesses that are looking to leverage their unpaid invoices from clients into immediate business financing. While A/R financing is a line of credit using the A/R as collateral, factoring is the actual sale of these unpaid invoices to an asset-based lender.
Minnesota Cash Advance
This form of financing is very short in term (usually under 18 months) and very high interest rates, its also the easiest form of financing for a Minnesota small business to get approved for (with 90% of companies being approved). A Minnesota business cash advance isn’t a loan, it’s the sale of their company’s future receivables, and approval for such requires good cash flow. Therefore, a Minnesota can get funded with a merchant cash advance even if they have bad credit.
|Factor rates||1.10 – 1.50|
|Fees||Low to High costs|
As we mentioned above, the traditional and alternative funding options for Minnesota small businesses are plentiful. The key is finding the right option that meets your business’s individual needs. If you are a Minnesota small business in the market for financing and need help understanding your options, please reach-out to one of our funding specialists, and we’ll help you navigate the process.