~ New initiative focuses on building rural Minnesota’s small business base ~

Saint Paul – Saying that small business is the backbone of Minnesota’s economy, Governor Tim Pawlenty today proposed a comprehensive new program to stimulate rural economic development. The initiative - Strategic Entrepreneurial Economic Development (SEED) – is designed to help strengthen communities and expand the small business base throughout Minnesota.

“Investing in small business will bring lasting value and economic growth to our entire state and especially rural communities that need it most,” Governor Pawlenty said. “Companies with fewer than 100 employees account for 97 percent of the state’s businesses and generate most new jobs. SEED will help new business, existing companies, and rural communities by providing a wide variety of economic development tools that can be matched to each situation.”

SEED will facilitate business development across Minnesota through 22 new or expanded programs targeting three key strategic areas:

1.) Developing and Growing Entrepreneurs - Small business success begins with solid planning, strong leaders, and access to a network of information.

• SEED would create a new Office of Entrepreneurship in the Department of Employment and Economic Development to help entrepreneurs by sharing information about small business services and best practices through an Entrepreneurial Network.
• SEED will help rural businesses participate in international trade workshops conducted by the Minnesota Trade Office to gain an understanding of international trade opportunities.
• SEED would engage local WorkForce Centers to serve dislocated workers and other job seekers who have an interest in starting their own business.

2.) New Capital for Rural Businesses - SEED provides an infusion of $13.5 million to encourage entrepreneurs, fuel existing business development, and encourage private investment in Greater Minnesota.

• Under SEED, investors would receive a 25 percent tax credit when they invest in regional “angel” funds that focus on emerging businesses and new technologies.
• SEED creates a revolving “micro” loan fund for new and expanding small businesses in rural communities. This new fund will provide small business loans of approximately $10,000 to $50,000 through non-profits, foundations, or community organizations.
• SEED creates the Small Business Product Development Grant Program to provide matching grants for entrepreneurs to access resources at qualified research and education institutions.

3.) Sustained Competitive Advantage for Rural Minnesota - SEED improves community infrastructure and reinforces competitive advantages in rural Minnesota.

• Governor Pawlenty’s marquee economic development program for Greater Minnesota would be enhanced under SEED by extending local and state tax exemptions for new and expanding businesses.
• Main Street Minnesota Grants will help revitalize downtowns and would be awarded to individual cities or groups of qualifying communities working together on business creation and retention, job creation and general economic vitality.
• To help more small cities with critical infrastructure needs, the Public Facilities Authority would provide financing through revenue bonds for clean water, sewer, streets or other publicly-owned facilities.

The Governor’s proposal calls for an investment of $20 million from the state’s general fund and another $50 million in one-time bonding. SEED will be presented to the legislature in 2008.

“During eight Minnesota Competes forums throughout the state this summer, business and community leaders in Minnesota told us what they need to be successful, and we listened. SEED is a direct result of the input we received at these forums,” said Employment and Economic Development Commissioner Dan McElroy. The Department of Employment and Economic Development will manage the comprehensive set of programs that comprise SEED.

SEED also emphasizes “targeted rural opportunity communities,” which are located in one of 64 Greater Minnesota counties. These counties have either experienced population decline or have unemployment rates greater than the state average.

SEED follows Governor Pawlenty’s overwhelmingly successful JOBZ initiative that promotes economic development in distressed areas of Minnesota by providing local and state tax exemptions. Since its inception in 2004, JOBZ has produced 310 deals with a commitment of 4,922 new jobs and the retention of 11,672 jobs in Greater Minnesota. Total JOBZ capital investment committed is $571,744,274.28

“There are currently more than 60,000 small businesses in rural Minnesota. SEED will make strategic and significant new investments to grow that base and expand business development in rural Minnesota communities,” Governor Pawlenty said.

SEED details are available at www.positivelyminnesota.com.

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SEED Brochure