Many Twin Cities entrepreneurs have struggled to pursue their business ventures in recent years. The recession has made it difficult for would-be small business owners to access financing as well as for existing start-up businesses to obtain loans to grow and thrive. This week, state officials made an announcement that many entrepreneurs may be interested to hear.
The state of Minnesota is launching a new $6.7 million program called the Angel Loan Fund. The Angel Loan Fund will offer up to $250,000 in interest-free loans to start-up businesses. This opportunity should not be confused with a similarly named tax credit that is offered to private investment companies in Minnesota.
The Angel Loan Fund will be available to those who create businesses in Minnesota with fewer than 500 employees. There are also criteria regarding the use of the loan money. The seven-year loans are designated for construction and equipment purchases among other specific needs.
Many people in the Twin Cities who are unable to obtain conventional loans may find that the Angel Loan Fund is a great vehicle for their business goals. However, those who will seek to start a business by taking advantage of this program should be sure to seek legal counsel regarding business formation.
Opening a small or mid-size business in the metro area is no easy task, even when the funding is readily available. In order to set themselves up for success, businesses need to be structured properly from the beginning. Many business owners struggle because they fail to consider important business formation questions during the early stages of a start-up. Should a business be organized as an LLC or an S corporation? How will business contracts, leases and intellectual property rights be handled? What about employment contracts?
Minnesota residents should be encouraged to consider Angel Loan Fund financing, but they should not rush into things before thoughtfully going over all of the legal and financial implications of their entrepreneurial ventures.
Source: Star Tribune, "New Minn. loan fund geared toward small companies through interest-free loans up to $250k," Dec. 12, 2013