Financing Programs

Whether through loans, grants or tax incentives, access to sufficient capital is essential when starting and growing your business. Learn more about local and state finance programs available for you.

RAEDI has allocated $600,000 in Economic Development Funds (EDF) to support *Base Businesses in the city limits of Rochester. Funding is available as a result of the passage of the half-cent sales tax voted on by the residents of Rochester in 2012. This initiative underscores the commitment to fostering economic growth and prosperity within the community.

The EDF program offers low-interest loans (minimum $50,000) tailored to meet the needs of local businesses, providing them with the financial resources necessary to thrive and expand. Whether you’re a startup looking to scale up or an established enterprise seeking to invest in new projects, these funds can serve as an asset to fuel your growth ambitions.

At RAEDI, we recognize the vital role that Base Businesses play in driving economic prosperity and job creation in our region. By offering this financial assistance, we aim to not only support the growth and sustainability of these businesses but also contribute to the overall economic development of Rochester.

Loan funds may be used for the following:

  • Land and Building Purchase: Acquiring property for business expansion or relocation.
  • Site Improvements: Enhancing the infrastructure of existing property to meet operational needs or regulatory requirements.
  • Building Construction: Funding the construction of new facilities to accommodate business growth or modernize existing structures.
  • Building Renovation and Leasehold Improvements: Upgrading or renovating existing buildings to improve functionality or aesthetics, as well as enhancing leased spaces to meet specific business needs.
  • Machinery and Equipment Acquisition: Investing in machinery and equipment necessary for production processes or service delivery.
  • Equity: Utilizing funds to strengthen the financial base of the business, providing stability, and enabling further growth opportunities.
  • Working Capital: Supporting day-to-day operations, including inventory management, payroll, and other operational expenses. It’s important to note that when using city funding for working capital, it must be invested as equity, aligning with regulatory requirements, and ensuring responsible financial management.

These diverse uses of loan funds offer flexibility to businesses, enabling them to address various needs crucial for their growth and development. Whether it’s acquiring assets, improving infrastructure, or strengthening financial stability, the Economic Development Funds provided by RAEDI serve as a valuable resource to support the thriving business community in Rochester.

If you are interested in learning more about how you can benefit from these funds or if you have any questions, please reach out to Tawonda Burks, Director of Operations at

Thank you for your attention, and we look forward to the opportunity to partner with you in achieving your business goals.

*A base business is defined as those selling most goods or services to a customer base located outside of the immediate geographic area or those whose primary business is supplying goods and services to those businesses. Base businesses include industrial, technology goods and services, manufacturing, agricultural processing, bioscience, or life science-related businesses. Retail/service business is excluded unless headquartered locally and scaled to meet the definition of a basic business.

This provides funds for business development and business growth projects that facilitate growth and diversification of the local economy. EDF investments of up to $250,000 are intended to be made in projects resulting in business investment, creation/retention of living wage jobs, and generation of property tax revenue thus facilitating growth of the local economy. The EDF will also leverage business financing provided by other private/public lenders. Contact Tawonda Burks at RAEDI at (507) 288-0208 or via email at for more information.

The Minnesota Emerging Entrepreneur Loan Program (ELP) supports the growth of businesses owned and operated by minorities, low-income persons, women, veterans and/or persons with disabilities. DEED provides grant funds to a network of nonprofit lenders, including RAEDI, to use these funds for loans to start-up and expanding businesses throughout the state. The program has additional goals of providing jobs for minority and/or low-income persons, creating and strengthening minority business enterprises, and promoting economic development in low-income areas. For more information visit the DEED website, or contact Tawonda Burks at RAEDI at (507) 288-0208 or via email at

A certified SBA company, 504 Corporation provides assistance to expanding businesses through the SBA 504 Loan Program. The program provides up to 40% of project financing at a very competitive interest rate and term. The 504 Corporation, located in Rochester, can be reached at (507) 288-6442.

In addition, the Southern Minnesota Initiative Foundation offers gap financing for qualified projects through their business loan program.

The Southeast Minnesota Capital Fund was formed to establish a pool of investment funds, contributed by individuals, for the purpose of providing equity financing to startup companies primarily in southeast Minnesota. Investors in the Capital Fund are looking for companies with high potential for rapid growth. Applicants must demonstrate a sound business plan and existence of a qualified management team that can execute the plan. There must be a reasonable prospect for a profit return on the investment.  For more information, contact the RAEDI office at (507) 288-0208.

This program works in partnership with local lending institutions, economic development organizations, and government agencies to help “fill the gap” between available and necessary financial resources. The program funds up to $200,000 and targets economic development opportunities to 6 key areas including bioscience, renewable energy, food/agriculture, manufacturing, and healthcare. For more information, call 507-455-3215 or go to

This is a method local governments use to pay for the costs of qualifying improvements necessary to create new development, redevelopment, or publicly assisted housing. The financing of the qualifying improvements is paid from the increased property taxes generated from the new development, redevelopment, or housing that would not occur “but for” such assistance. Tax increment is the difference between the existing property taxes on a parcel of land before development occurs and the increased property taxes created by the new development. The tax increment revenue is used by the local government for a term of years to assist the financing of qualifying projects. Click here for more information on TIF

Cities and counties are authorized to issue industrial development bonds, commonly referred to as industrial revenue bonds or “IRBs,” for the purpose of “paying all or part of the cost of purchasing, acquiring, constructing, improving, equipping, or remodeling facilities for commercial and manufacturing purposes.” This financing tool is designed to provide a vehicle whereby local governments can assist private companies with economic development in their community.

This program assists expanding businesses in creating and retaining high quality jobs with an emphasis on manufacturing, technology, and professional service employment. Grants are awarded to local governments which, in turn, make loans for specific business projects or finance public infrastructure improvements. For more information, go to the Minnesota Investment Fund

This fund provides job creation awards of up to $500,000 and capital investment rebates of up to $500,000 for qualifying businesses. Businesses may apply through a local government where their new or expanding business will be located and must be primarily engaged in manufacturing, warehousing, distribution, IT, or other eligible activities. At a minimum, a business must:

  1. Invest $500,000 in real property improvements within one year of designation as a Job Creation Fund business; and,
  2. Create 10 new full-time, permanent jobs within two years of designation as a Job Creation Fund Business; and,
  3. Obtain a resolution of support from the local government where the business will be located.

Learn more here about the Job Creation Fund