UPDATE: Guidance Issued on Minnesota Small Business Relief Grants Program

Dunlap Law Insights

The Minnesota Department of Employment and Economic Development (DEED) has posted guidance about the recently-created Minnesota Small Business Relief Grants Program. The program establishes a lottery for $10,000 grants for small businesses that can demonstrate financial hardship as a result of COVID-19. Our general overview is found here.

The online application will only be available from Tuesday, June 23, 2020, through Thursday, July 2, 2020, at 5:00 pm. After the application window ends, DEED will pair with the Minnesota Lottery and an independent, third-party observer to select winners randomly.

No documentation is needed to apply. But if selected for an award, you will be asked by your award administrator (here, Southern Minnesota Initiative Foundation) for documentation that verifies your eligibility. That may include sales tax reporting, period statements from third-party sales platforms, merchant services statements, point of sale or register reports, third-party payroll processor reports, federal form 941/employer’s quarterly federal tax return, or other payroll‑related filings.

Nonprofit organizations cannot apply. DEED also excludes hedge funds, pyramid schemes, gambling enterprises, sexually explicit businesses, home-based businesses (except licensed child care providers), and lenders, among others.

The $60.3 million pool will be split evenly between metro counties (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington counties) and non-metro counties. The physical location of a business, not its owner, determines whether it is in the metro or non-metro pool. With regard to affiliation, DEED has said that an individual business owner should only submit one application and can only receive one grant regardless of how many separate businesses they own, or how many business locations they have. “The majority ownership of a business must be owned by one or more permanent residents of Minnesota.” Non-Minnesota businesses are ineligible.

If your business falls in more than one of the Legislature’s priority categories (less than 6 workers, minority business enterprises, veteran-owned, woman-owned, or “indoor retail and food markets with an ethnic cultural emphasis”), you will be in a drawing for each priority category. If you are not drawn in any of the priority categories, you’ll then have a chance in the final general round, which includes all unselected eligible businesses. Businesses with operations restricted to 50% or less of normal capacity by Executive Orders on May 18 (e.g., restaurants and bars) also are entitled to priority, though the mechanics are less clear.

DEED expects to announce winners in mid‑July. If you win, you will be required to sign a document certifying that you are eligible and that you used the award for eligible expenses only, including working capital to support payroll expenses, rent, mortgage payments, utility bills, and other similar expenses that occurred since March 1, 2020, in the regular course of business.

There is no repayment requirement. But DEED says that the State will reserve the right to audit a random selection of grant recipients. Grant recipients in violation of the application process terms or grant agreement may be required to refund the money.

We expect more details in the days to come.