DEED and Pioneer Bank Empowering Minnesota Small Businesses with Automation Loans

Blog written by Pioneer Bank, a Greater Mankato Growth Bronze Investor.

Minnesota’s Employment and Economic Development (DEED) continues to invite applications from businesses seeking financial support through the Automation Loan Participation Program (ALPP). This program offers companion loans designed to bridge financing gaps for businesses investing in machinery, equipment, or software to enhance productivity and automation. These loans are typically paired with private financing, often through a bank, matching or exceeding the DEED loan amount. Eligible borrowers encompass manufacturing, distribution, technology, and warehousing companies located within Minnesota, with a focus on those with fewer than 500 employees.

Key Loan Details
For those interested, you can find detailed loan terms on the Automation Loan Participation Program page. Here’s a snapshot of what the program offers:

  • Loan amounts of up to $500,000
  • A low 1% interest rate
  • Loan terms spanning 5-7 years, aligned with the asset’s useful life
  • The companion loan must be matched at least 1:1 by the lender financing
  • The option to defer payments for up to 12 months
  • The possibility for DEED to take a subordinate position on collateral if requested by the lender

Additional Considerations
It’s important to note that this loan cannot be used for the same purpose as any federally guaranteed private financing for the project. Furthermore, the total cost of the machinery, equipment, or software being acquired should be less than $20,000,000.

The ideal project has 5:1 leverage and applicants need to be able to demonstrate a need for gap financing from the program. We strongly encourage businesses that qualify as owned by Socially and Economically Disadvantaged Individuals (SEDI), including those located in CDFI Investment Areas, to apply to the program.

Understanding Automation
If you’re curious about how automation is defined within the program, you can explore the definitions in the FAQ section of the DEED website. Automation encompasses Fixed Automation, Programmable Automation, and Flexible Automation.

Seeking Guidance
Wondering if your project fits within this program? Pioneer Bank’s experienced bankers can assist you in determining your eligibility and suitability. Reach out to one of our bankers at banco pionero, serving southern Minnesota and surrounding areas.

Remaining Opportunities
According to DEED, there are still funds available for this program. DEED has approved loans totaling just over $3MM to eleven manufacturing businesses across Minnesota. That leaves approximately $9MM available to the program from Minnesota’s overall State Small Business Credit Initiative (SSBCI) allocation. It’s worth noting that this initiative is part of the SSBCI, backed by funding from the U.S. Department of the Treasury.

Get in Touch
Our mission is to ensure that small businesses in our region understand and can access this valuable program. Should you have any questions or require assistance, please don’t hesitate to contact Duane Olenius, Chief Relationship Officer of Pioneer Bank, for guidance regarding the program’s application process and benefits. Your success is our priority!

Pioneer Bank, Member FDIC

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