EDA to seek revolving loan exception
The move could make revolving loan funding easier to use, Marshall EDA officials said
MARSHALL — They’re supposed to help local business grow and develop. But it’s not always easy for communities to use revolving loan funds, Marshall Economic Development Authority members said Tuesday.
There might be an opportunity to make better use of the EDA’s revolving loan funds, said Marshall EDA Directors Cal Brink and Tara Onken. Both were at Tuesday’s meeting of the Marshall City Council, asking to apply for an exception that could make more than $250,000 more easily available for economic development.
Council members unanimously approved their request.
Brink and Onken spoke to the council about a recent change to the Minnesota Investment Fund (MIF), and how it could affect economic development in Marshall. Loan repayments to the MIF have seeded revolving loan funds in cities, counties and townships around Minnesota. The revolving loan funds are meant to extend the reach of the MIF program by providing additional loans to businesses. But the state has found that many communities with revolving loan funds aren’t really using them, Brink said.
“Part of the reason is the difficulty of putting (the money) back out there,” Brink said. Not all kinds of businesses are eligible for revolving loan funding, and there are other criteria to meet, he said.
Legislation passed in 2017 could offer a solution, Brink and Onken said. The Minnesota Legislature is now allowing a one-time exception to the rules on how revolving loan funds can be used. Local governments can now opt to use 80 percent of their uncommitted revolving loan fund balance for any lawful purpose, as long as 20 percent of the balance is returned to the state. Cities, counties and townships who want to use the one-time exception have until June 1 to apply to the Minnesota Department of Employment and Economic Development.
In a recommendation letter presented to the city council, Brink said if the Marshall EDA took the one-time exception, it could use around $252,900 from its uncommitted revolving loan funds, and send about $63,000 back to the state of Minnesota.
“We didn’t make this recommendation lightly,” Onken said. Taking the one-time exception could allow the EDA to make those funds more accessible to local businesses.
Brink said the EDA will probably need to go through a process to develop ways for the revolving loan funding to be used. On Tuesday, they were seeking the council’s approval to apply to DEED for the exception.
Council members voted in favor of applying for the one-time exception.