Understanding the Role of Minnesota Business Finance Corporation in Small Business Funding
Small businesses are the backbone of Minnesota’s economy, accounting for over 50% of employment in the state. However, accessing funding to start or grow a small business can be a challenging task. This is where the Minnesota Business Finance Corporation (MBFC) comes in, helping small businesses finance their operation and expansion plans. So, what exactly is the role of the MBFC in small business funding?
What is the Minnesota Business Finance Corporation?
MBFC is a non-profit organization established in 1983 to provide loans to small businesses in Minnesota. It partners with other lenders, such as banks and credit unions, to provide loans that are beyond their lending capacity. MBFC offers a range of loan programs, including SBA 504 loans and SBA 7a loans, to meet the different needs of small businesses.
How does MBFC help small businesses?
MBFC helps small businesses access funding that they wouldn’t have been able to on their own. With MBFC, small businesses can get loans at favorable terms, such as reduced interest rates and longer repayment periods. This makes it easier for small businesses to invest in their operations and grow their business.
In addition, MBFC provides technical assistance to small businesses, helping them improve their creditworthiness and increase their chances of getting loans. MBFC also offers loan guarantees, which reduce the risk for lenders and increase the probability of loan approval.
MBFC Loan Programs
MBFC offers different loan programs to suit the needs of small businesses. These programs include:
SBA 504 Loans
SBA 504 loans allow small businesses to purchase real estate, equipment, or other fixed assets. These loans have attractive interest rates and long repayment periods, making them ideal for long-term investments.
SBA 7a Loans
SBA 7a loans are more flexible than SBA 504 loans and can be used for a wide range of business purposes, including inventory, working capital, and debt consolidation. These loans have variable interest rates and shorter repayment periods.
Other Loans
MBFC also offers other loan programs, such as Rural Energy for America Program (REAP) loans, to small businesses that meet specific requirements.
Case Studies
Let’s take a look at how MBFC has helped some small businesses access funding.
Case Study 1: Minnesota Machine
Minnesota Machine, a manufacturer of custom-made machine parts, needed to purchase a new building to accommodate their growing business. However, they were unable to secure a loan on their own due to their limited credit history. MBFC provided a loan guarantee that helped Minnesota Machine secure a loan from their bank and purchase the new building.
Case Study 2: Northern Lights Music
Northern Lights Music, a music store in Minnesota, wanted to expand their business by offering music lessons. However, they didn’t have the funds to purchase additional equipment and hire new teachers. MBFC provided an SBA 7a loan that allowed Northern Lights Music to purchase new equipment and hire additional teachers, enabling them to grow their business and offer new services to their customers.
Conclusion
The Minnesota Business Finance Corporation plays an essential role in providing funding to small businesses in Minnesota. Through its loan programs and technical assistance, MBFC helps small businesses access the funds they need to start and grow their businesses. Small business owners can confidently turn to MBFC for support and expertise in securing the vital funding they need to succeed.
