Walz launches $10 million fund, granting small businesses low-interest loans
Lt. Gov. Peggy Flanagan poses with Amy Abebe Tsegaye and Dereje Wudmatas, co-owners of Erta Ale Ethiopian and recipients of DEED funding. Photo by Nafi Soumare/Minnesota Reformer.
Gov. Tim Walz sought to head off continued criticism from some in the business community with the announcement Tuesday of the Minnesota Expanding Opportunity Fund, with plans to allocate $10 million in low-interest loans to non-profit lender partners, which will use the funds to lend to Minnesota small businesses.
“One of the biggest challenges for small businesses is just straight access to capital,” Walz said, citing rising interest rates as another challenge for businesses seeking loans.
The Expanding Opportunity Fund will dole out up to $100,000 in funds at a 0.5% interest rate. Applications will be open through Dec. 15.
In total, Minnesota has over 500,00 small businesses, making up more than 95% of all businesses in the state. Over 1.3 million people are employed by small businesses in Minnesota, or 47% of the total workforce, according to Lt. Gov. Peggy Flanagan.
“Our economy relies on entrepreneurs pursuing their dreams and working hard, and these dreams are made possible in part because of the support that we can offer at the state and federal level,” Flanagan said.
The funding comes through the Department of Employment and Economic Development, following a slew of other programming aimed at Minnesota small businesses. Kevin McKinnon, DEED deputy commissioner, said record numbers of businesses applied for the 2021 Small Business Credit Initiative and Emerging Entrepreneur Loan Programs which dole out millions of dollars in loans to small businesses.
“These programs offer a lot of different tools for lenders and businesses alike, direct loans, loan guarantees, loans to manufacturers to automate, and more,” McKinnon said.
Amy Abebe Tsegaye and Dereje Wudmatas, co-owners of Erta Ale Ethiopian Restaurant, said DEED programs helped create something more than just a place for sambusas and fit-fit.
“In the first six months of operation, Erta Ethiopian Restaurant established itself as a true community gathering space, house, among other things. Without you guys, I might not have opened my business,” Tsegaye said to state officials.
The Walz administration and the Legislature funded COVID-19-affected small businesses starting in 2020, when they allocated $62 million in relief funds for businesses with 50 or fewer employees.
Still, the business lobby has been critical of the Walz administration for what they say are onerous taxes and regulations. They’ve been especially skeptical of the new paid family and medical leave program, signed into law earlier this year and set to go into effect in 2026, for its anticipated impact on small businesses. Owners are worried about the extended absence of key employees, as well as the new payroll tax shared between workers and owners.
Flanagan said the paid family and medical leave program will be a net benefit to small businesses by helping them “support and retain workers through family and medical emergencies.”
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