SF 4535
1st Engrossment - 94th Legislature (2025 - 2026)
Posted on 04/27/2026 04:02 p.m.
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A bill for an act
relating to economic development; establishing a Minnesota business recovery
loan program; canceling prior appropriations; appropriating money; requiring a
report.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. new text begin MINNESOTA BUSINESS RECOVERY LOAN PROGRAM;
APPROPRIATION.
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new text begin Subdivision 1. new text end
new text begin Appropriation. new text end
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(a) $100,000,000 in fiscal year 2026 is appropriated
from the Minnesota forward fund account to the commissioner of employment and economic
development for deposit in the Minnesota business recovery loan account in the special
revenue fund established in subdivision 3, for loans under this section. This is a onetime
appropriation. Money is available until June 30, 2028.
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(b) Of the amount appropriated in paragraph (a):
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(1) $18,000,000 is for a grant to the Minnesota Initiative Foundations to be distributed
to individual initiative foundations based on the demand of the region serviced by the
initiative foundation relative to the purpose of the loan program to provide zero-interest
loans to businesses in greater Minnesota; and
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(2) $82,000,000 is for grants to nonprofit corporations that meet the criteria under
Minnesota Statutes, section 116M.18, subdivision 2, and are a currently certified nonprofit
partner to provide zero-interest loans to businesses in the seven-county metropolitan area.
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(c) For purposes of this section, "partner organizations" or "partner" means nonprofit
corporations that have current contracts to enroll small business loans in the Minnesota
emerging entrepreneur program, the state small business credit initiative, or both, and that
will provide loans under this section. For purposes of this section, "commissioner" means
the commissioner of employment and economic development.
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(d) Of the amount appropriated in paragraph (a), no more than five percent may be used
for administrative costs incurred by partner organizations in making the loans under this
section, and two percent may be used for costs related to administration and oversight of
the program by the Department of Employment and Economic Development.
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new text begin Subd. 2. new text end
new text begin Loan program established. new text end
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(a) A Minnesota business recovery loan program
is established to assist businesses adversely affected by activities and events related to
increased immigration enforcement in Minnesota beginning December 1, 2025, to help
rebuild and stabilize affected businesses, protect jobs, and ensure recovery of Minnesota's
economy.
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(b) The commissioner shall purchase a participation interest in loans made by partner
organizations to eligible recipients.
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(c) The commissioner may negotiate and enter into agreements with the partner
organizations to purchase loans originated under this section. Agreements under this section
are considered financial assistance agreements and are not considered procurement or grant
contracts.
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(d) The commissioner may adopt guidelines, forms, and procedures necessary to
implement this section.
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new text begin Subd. 3. new text end
new text begin Account established. new text end
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The Minnesota business recovery loan account is created
as an account in the special revenue fund. Money in the account is appropriated to the
commissioner to implement the Minnesota business recovery loan program.
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new text begin Subd. 4. new text end
new text begin Eligibility for loan. new text end
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To be eligible for a loan under this section, a business
must:
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(1) be located in the state and owned by one or more permanent residents of the state;
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(2) operate from a permanent physical commercial location;
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(3) be in good standing with the secretary of state and the Department of Revenue as of
the date the loan is awarded;
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(4) have annual gross receipts based on the corresponding loan amount levels provided
in subdivisions 6 and 7; and
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(5) be able to demonstrate a loss in revenue that is greater than 30 percent during the
period between December 1, 2025, and February 28, 2026, as compared with the same
period during the previous year.
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new text begin Subd. 5. new text end
new text begin Loan participation. new text end
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(a) Partner organizations shall enter into an agreement
with the commissioner to make loans under the program.
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(b) The commissioner shall purchase a 100 percent participation interest in loans made
to eligible recipients by partner organizations as specified under this section.
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(c) Partner organizations shall be responsible for underwriting, servicing, and monitoring
loans purchased by the commissioner.
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(d) Partner organizations must conduct outreach to publicize the availability of the loan
program to culturally and linguistically diverse communities within the area served by the
partner organization.
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new text begin Subd. 6. new text end
new text begin Loan amounts; Minnesota Initiative Foundations. new text end
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(a) The minimum state
contribution to a loan under this subdivision is $2,500. The maximum loan amounts under
this subdivision are as follows:
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(1) for businesses having $150,000 or less in annual gross receipts, a maximum loan of
$25,000;
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(2) for businesses having $500,000 or less in annual gross receipts, a maximum loan of
$50,000; and
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(3) for businesses having $1,500,000 or less in annual gross receipts, a maximum loan
of $150,000.
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(b) Loans must be for a term of no more than 60 months.
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new text begin Subd. 7. new text end
new text begin Loan amounts; seven-county metropolitan area. new text end
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(a) The minimum state
contribution to a loan under this subdivision is $2,500. The maximum loan amounts under
this subdivision are as follows:
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(1) for businesses having $500,000 or less in annual gross receipts, a maximum loan of
$50,000;
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(2) for businesses having $1,000,000 or less in annual gross receipts, a maximum loan
of $75,000; and
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(3) for businesses having $3,000,000 or less in annual gross receipts, a maximum loan
of $200,000.
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(b) Loans must be for a term of no more than 60 months.
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new text begin Subd. 8. new text end
new text begin Loan purposes. new text end
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Loans must be used for business purposes including current
obligations related to payroll, lease or mortgage payments, inventory, insurance, property
taxes, utilities, and other operating costs associated with ongoing operations exclusively in
Minnesota. Borrowers must provide evidence that loan proceeds were used for eligible
purposes. Loans must not be used for consolidating, repaying, or refinancing debt accrued
prior to December 1, 2025, or speculation or investment in real estate.
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new text begin Subd. 9. new text end
new text begin Deferred payments. new text end
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Loan repayments must begin no later than three months
after a loan is awarded.
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new text begin Subd. 10. new text end
new text begin Loan forgiveness. new text end
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(a) After making 24 consecutive on-time payments, the
borrower may apply for forgiveness of up to 60 percent of the loan proceeds.
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(b) For the purposes of taxable income, the forgivable portion of the loans are exempt
from income tax reporting in Minnesota.
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new text begin Subd. 11. new text end
new text begin Fraud deterrence measures. new text end
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(a) Any applicant suspected of fraud must be
reported to the commissioner of employment and economic development within 15 days
of discovery. The commissioner must send the report to the Minnesota Bureau of Criminal
Apprehension for investigation.
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(b) Each application must display the following notice: "Fraudulent applications will
not be tolerated. Information from any suspected fraudulent application will be reported to
state investigating authorities."
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(c) Applicants must certify by signature that they have read and understand the notice
required by paragraph (b).
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new text begin Subd. 12. new text end
new text begin Partner program account; loan payments. new text end
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(a) Partner organizations must
establish a commissioner-certified account for the purpose of tracking loans purchased
under the program.
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(b) Loan payments received from borrowers by partner organizations shall be remitted
to the commissioner no more than 30 days following the end of each calendar quarter so
long as any balance remains outstanding on the loans.
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(c) Loan payments received by the commissioner must be returned to the Minnesota
forward fund account.
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new text begin Subd. 13. new text end
new text begin Reporting requirements. new text end
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(a) Partner organizations must provide annual
reports on Minnesota business recovery loans to the commissioner of employment and
economic development that include a description of businesses supported by the program,
an accounting of the loans made during the quarter, the source and amount of money collected
and distributed by the program, the program's assets and liabilities, and an explanation of
administrative expenses.
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(b) By December 1, 2028, the commissioner of employment and economic development
must compile the information received under paragraph (a) in a report detailing the use of
money under this section and submit the report to the chairs and ranking minority members
of the senate and house of representatives committees with jurisdiction over economic
development.
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(c) By April 1, 2034, the commissioner must provide a report compiling the information
received from a partner organization under paragraph (a) to the chairs and ranking minority
members with jurisdiction over economic development. The report must also specify any
partner organization that failed to provide the information required under paragraph (a).
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new text begin Subd. 14. new text end
new text begin Expiration. new text end
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This section expires December 31, 2033.
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new text begin EFFECTIVE DATE. new text end
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This section is effective the day following final enactment.
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Sec. 2. new text begin ANALYSIS OF ECONOMIC IMPACT FROM INCREASED IMMIGRATION
ENFORCEMENT IN MINNESOTA.
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(a) $250,000 in fiscal year 2027 is appropriated from the general fund to the commissioner
of employment and economic development to conduct a comprehensive analysis of the
statewide economic impact of increased immigration enforcement since December 1, 2025,
on Minnesota businesses and the Minnesota economy. This is a onetime appropriation.
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(b) The analysis must include, but is not limited to, evaluation of:
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(1) impacts on labor force participation, workforce availability, and workforce shortages
across sectors of Minnesota's economy;
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(2) impacts on small businesses and microbusinesses, including family-owned,
immigrant-owned, and locally owned businesses, with consideration of workforce availability,
hiring challenges, operational costs, business continuity, and long-term business
sustainability;
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(3) sector-specific impacts on industries including agriculture, food processing,
construction, health care, hospitality, manufacturing, transportation, and retail;
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(4) impacts on business operations, supply chains, productivity, and business closures
or relocations;
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(5) regional economic impacts across Minnesota, including comparisons across counties
and between rural, suburban, and urban communities and regional labor markets, to the
extent practicable; and
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(6) impacts on consumer spending, state and local tax revenue, and overall economic
output.
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(c) The commissioner may solicit proposals and contract with a nonpartisan third-party
to prepare the report.
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(d) By February 1, 2027, the commissioner must submit the analysis in a report to the
chairs and ranking minority members of the legislative committees with jurisdiction over
workforce and economic development.
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Sec. 3. new text begin CANCELLATION.
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$100,000,000 of the fiscal year 2024 Minnesota forward fund account appropriation in
Laws 2023, chapter 53, article 21, section 7, paragraph (c), is canceled.
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new text begin EFFECTIVE DATE. new text end
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This section is effective the day following final enactment.
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