SF 1145

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/11/2025 10:52 a.m.

A bill for an act
relating to economic development; appropriating money for the GroundBreak
capital access and innovation fund; requiring a report.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin GROUNDBREAK CAPITAL ACCESS AND INNOVATION FUND.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
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new text begin (b) "Commissioner" means the commissioner of employment and economic development.
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new text begin (c) "Originating partner" means a community development financial institution or
nonprofit organization engaged in business development or economic development.
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new text begin (d) "Startup" means a business that is seeking seed funding to initiate or expand revenue.
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new text begin (e) "Equity enhancements" means financial assistance that increases ownership.
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new text begin (f) "GroundBreak" means a coalition of philanthropic, private, and civic partners working
to expand access to flexible capital and traditional bank loans.
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new text begin (g) "GroundBreak loan pool" is private capital for low-cost, long-term loans.
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new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin $50,000,000 in fiscal year 2026 is appropriated from the general
fund to the commissioner of employment and economic development for a grant to the
Minneapolis Foundation to improve access to capital for entrepreneurship, commercial real
estate development, and homeownership through forgivable business loans, commercial
real estate equity enhancements, and forgivable down payment assistance loans. The base
for this appropriation is $25,000,000 in fiscal year 2028, $25,000,000 in fiscal year 2029,
and $0 in fiscal year 2030.
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new text begin Subd. 3. new text end

new text begin Forgivable startup business loans. new text end

new text begin (a) The Minneapolis Foundation shall
provide capital to originating partners to make forgivable startup loans to eligible businesses
using criteria and reporting requirements approved by the commissioner.
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new text begin (b) To be eligible for a forgivable business loan under this subdivision, a business must:
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new text begin (1) have primary business operations located in the state;
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new text begin (2) be a startup business seeking capital to grow;
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new text begin (3) lack access to startup capital through a traditional financial institution or other sources;
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new text begin (4) submit a business plan; and
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new text begin (5) complete a technical assistance program provided by an originating partner or obtain
a letter of recommendation from an originating partner stating that the business plan is
complete and has been reviewed and recommended for a loan.
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new text begin (c) Forgivable loans may be used for inventory purchases, payroll, rent, technology,
equipment, marketing, professional services, leasehold improvements, and other similar
expenses related to business formation or growth.
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new text begin (d) Forgivable loans under this subdivision shall not exceed $50,000.
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new text begin (e) No business or individual may receive more than one forgivable loan under this
subdivision.
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new text begin (f) The originating partner shall forgive 100 percent of the loan after three years if the
business uses funds for approved purposes.
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new text begin (g) Preference shall be given to businesses that seek to hire at least one W-2 employee.
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new text begin Subd. 4. new text end

new text begin Commercial real estate equity enhancements. new text end

new text begin (a) The Minneapolis Foundation
shall provide capital to originating partners to provide equity enhancements for commercial
real estate developments using criteria and reporting requirements approved by the
commissioner.
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new text begin (b) To be eligible for an equity enhancement under this subdivision, a project must:
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new text begin (1) have primary business operations located in the state;
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new text begin (2) have total project costs under $10,000,000; and
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new text begin (3) submit a complete development plan.
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new text begin (c) Preference shall be given to developments that secure at least 60 percent of senior
debt through a traditional financial institution and up to 35 percent of junior debt through
an originating partner that provides capital through the GroundBreak loan pool.
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new text begin (d) Equity enhancements under this subdivision must not exceed $250,000.
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new text begin Subd. 5. new text end

new text begin Forgivable down payment assistance loans. new text end

new text begin (a) The Minneapolis Foundation
shall provide capital to originating partners for the Advancing Black Homeownership
Community Fund Special Purpose Credit Program or a similar special purpose credit program
for forgivable down payment assistance loans using criteria and reporting requirements
approved by the commissioner.
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new text begin (b) To be eligible for a forgivable loan under this subdivision, an applicant must qualify
as an eligible borrower of an approved special purpose credit program under Code of Federal
Regulations, title 12, section 1002.8, Regulation B, and:
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new text begin (1) be a resident of the seven-county metropolitan area;
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new text begin (2) have no present ownership interest in a principal residence during the previous
three-year period; and
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new text begin (3) have annual income equal to or less than the Start Up Income Limits for one to two
person households published by the Minnesota Housing Finance Agency.
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new text begin (c) Forgivable loans under this subdivision must not exceed $25,000.
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new text begin (d) The originating partner shall forgive 100 percent of the loan over five years subject
to the following:
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new text begin (1) a loan under this subdivision is forgivable at the rate of 20 percent per year. The
prorated balance is repayable if the property converts to nonowner occupancy, is sold, is
subjected to an ineligible refinance, an unauthorized transfer of title, or a completed
foreclosure action within the loan term;
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new text begin (2) recapture may be waived in the event of a financial or personal hardship with the
approval of the originating partner; and
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new text begin (3) recaptured funds must be returned to the program for redistribution to eligible
borrowers.
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new text begin (e) Forgivable loans under this subdivision may be combined with other state, federal,
or local down payment assistance programs.
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new text begin Subd. 6. new text end

new text begin Program administration. new text end

new text begin (a) The Minneapolis Foundation shall establish
appropriate accounting practices for the purpose of tracking forgivable loans and equity
enhancements.
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new text begin (b) Up to five percent of a forgivable startup loan and commercial real estate equity
enhancement under this section may be used by originating partners for administration and
monitoring of the program, and up to an additional three percent may be used by the
originating partner for technical assistance to applicants for help with language, culture,
and technology.
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new text begin (c) Up to ten percent of a forgivable down payment assistance loan under this section
may be used for administration of the program.
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new text begin (d) Any money appropriated in fiscal year 2026 not committed by June 30, 2029, must
be returned to the commissioner and canceled back to the general fund.
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new text begin Subd. 7. new text end

new text begin Reporting requirements. new text end

new text begin (a) By February 15, 2027, and annually until February
15, 2030, the Minneapolis Foundation shall submit a report to the chairs and ranking minority
members of the legislative committees with jurisdiction over economic development on the
use of funds and program outcomes. This report shall include the following:
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new text begin (1) the number of businesses, commercial real estate projects, and homeowners to which
capital was provided;
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new text begin (2) a description of businesses and commercial real estate projects supported by the
program;
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new text begin (3) aggregated demographic information as specified by the commissioner regarding
each recipient; and
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new text begin (4) the program's impact on job creation.
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new text begin (b) The Minneapolis Foundation must establish and maintain a public website reporting
on the use of funds and any relevant performance measures. Up to four percent of funds
may be used by the Minneapolis Foundation for administration and monitoring of the
program.
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new text begin (c) By February 15, 2027, the Minneapolis Foundation must complete an independent
audit of the use of funds under this section in accordance with standard accounting practices.
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