The City of Saint Paul is providing $500,000 in low-interest loans to incentivize businesses in areas of concentrated poverty (ACP50) to hire Saint Paul residents. ACP50 areas are defined as neighborhoods where 50 percent or more of the residents are people of color, and 40 percent or more have family or individual incomes that are less than 185 percent of the federal poverty threshold.
Incentives include up to 20 percent principal forgiveness for initial job creation, with additional forgiveness of up to 30 percent for hiring residents who also live in these ACP50 areas. In order to maximize the principal forgiveness, the business must remain in place and retain those jobs for a five-year period.
If a loan is secured, a fee equal to 1 percent of the loan principal issued will be due on the closing date.
Funds can be used for any business-related purpose related to job creation, such as:
- Exterior or interior building improvements including parking, lighting, and landscaping
- Leasehold improvements
- Professional fees in conjunction with the completion of a project
- Furniture, fixtures and equipment purchases
- Inventory purchases
- Working capital
How to Apply
Applications for Job Opportunity Fund loans are accepted on a first-come, first served basis, and will be reviewed by City staff. Businesses can receive a $10,000 maximum loan for each new, full-time equivalent job created, with a maximum total loan of $100,000. The Housing and Redevelopment Authority (HRA) will need to approve any loan requests over $50,000.
A $75 application fee is due at the time an application is submitted. For assistance, please contact Angela Riffe at (651) 266-8557 or email@example.com.
Eligible properties are highlighted in blue in the map below.
- The business must be currently located, or if new will operate*, within an ACP50 area or across the street from eligible businesses (e.g., the north side of Selby Avenue between Lexington Avenue and Mackubin Street is within an ACP50 area, businesses on the south side of Selby would also qualify).
- * Any startup business or relocating business should have evidence of a qualifying address through a purchase or lease commitment.
- In order to maximize the principal forgiveness, the business must remain in place and retain the jobs for a five-year period.
- Start-up business must have a business plan and monthly income and cash flow projections for at least three years.
- Funds must be matched with private debt or equity of at least 30% for existing businesses and of at least 60% for a start-up business. For example, an existing business’ request for $10,000 must be matched with at least $3,000 (minimum total project cost of $13,000) and a start-up business’ request for $10,000 must be matched with at least $6,000 (minimum total project cost of $16,000).
Annual job reporting requirements:
Annual Job Certification Reports are required, with the first due 11 months from the closing date.
- The first certification report due 11 months from the closing date will document the number of full-time equivalent (FTE) jobs created and whether any new jobs are held by ACP50 residents.
- All subsequent certification reports, commencing with the report due 23 months from the closing date, will document the number of FTE jobs created and retained during the five-year forgiveness period.
- Annual reports will continue until the date that is five years and 11 months from the closing date.
- If the job creation or retention requirements are not fully satisfied with the submitted annual job certification, all or a pro-rated portion of the forgivable amortizing loan will be due over the subsequent 12-month period, until the next annual certification report is due.
- A Full-Time Equivalent (FTE) Job shall mean any single employee who works at least thirty-two hours per week and receives same/similar benefits as a full-time employee; or any single employee that is salaried with full benefits. Note: Employer-provided health benefits for qualifying jobs will strengthen your application.
- For example: for the loan in the example above, if two of the four jobs are held by ACP50 residents when measured at the completion of the deferral period, the amortizing loan principal will be $16,000 and the forgivable loan will be $24,000; all four jobs were created in the first year so no payments will be due under the amortizing loan that is forgivable until the 2nd annual report is submitted. If the 2nd annual report demonstrates that only three of the four jobs remain, then only 75% of the amortizing forgivable monthly loan payment will be forgiven and 25% of the monthly payment will be due over the next twelve month period.
Minimum loan collateral requirements:
- Loans must be full recourse obligations to the business and owners of the business
- A mortgage will be recorded either on the real property or the leasehold interest, or other available real property
- A fixture filing on all the assets of the business
Based on the maximum loan of $100,000, the following compliance may be required, depending on the total project cost and loan amount (click here for further detail):
- Affirmative Action/Equal Employment Opportunity, applies to any project that receives $50,000 or more in loan principal
- Labor Standards, applies to any project with a total cost of $25,000 or more
- Two Bid Policy, applies to any loan of $20,000 or more
- Vendor Outreach Program, applies to any project with a total cost of $50,000 or more
- Business Subsidy Law, annual reporting only
- Initial payment deferral period of 12 months, no interest will accrue.
- Deferral period may be extended with a longer construction period.
- Amortizing loan with a maximum term of 10 years (commencing after the deferral period).
- Interest rate is set at prime minus 1%, with a floor of 1%.
- Loan will be set up at closing with 70% of the principal as an amortizing loan up to the maximum 10-year term, with the balance of 20% set up as an amortizing forgivable loan with monthly payments for a five -year term.
- Monthly payments will be due on the amortizing loan commencing on the first anniversary from the closing date, until loan maturity.
- No payments will be due on the amortizing forgivable loan provided the business meets the job creation and retention requirements during the five-year term.
- If any ACP50 residents are hired for the new jobs, the loan terms will be modified, with up to an additional 30% of the principal included in the forgivable amortizing loan, with a like reduction in the amortizing loan principal.
- For example: if the loan request is for $40,000, and four (4) jobs will be created, the initial loan terms will include a $32,000 (80%) amortizing loan and a $8,000 (20%) amortizing loan that is forgivable; if all four (4) jobs are created and held by ACP50 residents when measured at the completion of the deferral period, the amortizing loan will be reduced to $20,000 (50%) and the amortizing loan that is forgivable will be increased to $20,000 (50%). The adjustment of the loan principal would be pro-rated, such that if one-half of the jobs are held by ACP50 residents, one-half of 30% or 15% will be adjusted ($6,000).