NEW ULM – The New Ulm Economic Development Authority (EDA) approved revisions two of its loan programs.

Last month, The New Ulm Economic Development Authority (EDA) held the first in a series of work sessions to review each of its loan and grant programs. The Commercial Rehab Loan and Small Business Loan program were the first to be discussed. Following feedback from the EDA board, staff brought revised versions of the programs to the board for approval.

The Commercial Property Rehab Loan is one of the oldest in the community, having originated in the early 1980s, before New Ulm had an EDA. The program started as a housing rehabilitation program and is now used for improvements to commercial properties.

The EDA contributes 50% the cost of an improvement project or up to $75,000 for eligible projects. The interest on the loan is 2%. For the last five years, the EDA has not required applicants for this loan have lender involvement. Applicants were allowed to self fund. The board debated whether applicants should be required to use a bank loan for their portion of the project as an extra safety net. It was ultimately decided to allow self funding, but only for projects under $50,000. Applicants that do self fund will need a credit report and a minimum credit score of 650.

Board member Andrea Boettger made the motion to approve the revisions to the commercial rehab loan program. It was unanimously passed by the board.

The Small Business loan is one of the newer EDA programs, created in 2019. The Small Business loan program is a method of providing small businesses with financial assistance and is similar to a micro-loan. A businesses that need a small investment quickly that a bank was unlikely to provide could apply for this program.

Previously it awarded loans between $2,000 to $10,000 at 1% interest over a five-year term. The business is required to be open and have a storefront. The business is considered a small business if it has 20 or less full-time employees.

The revised Small Business loan increased the loan amount to $15,000 at 2% interest. The businesses must now be open at least one year to apply for the loan and the applicant must have a minimum 650 credit score. Rent and utilities are no longer eligible expenses for use of the loan.

Councilor David Christian made a motion to accept the new revisions to the small business loan program. It was unanimously approved by the board.