SF4972

Purpose

• Explain changes to the PROMISE grant program to help small Minnesota businesses access funding in communities facing economic challenges.

Main Provisions

• Administration and criteria
  • Grants are provided to businesses through a partner organization using forms, applications, and reporting requirements approved by the commissioner.
  • Eligibility requires:
  • Primary business operations located in Minnesota.
  • The business is in a community harmed by factors such as structural racial discrimination, civil unrest, lack of access to capital, population loss, aging population, or lack of regional economic diversification.
  • Gross annual revenue in the prior year is $750,000 or less.
  • If the business is located at the owner’s residence, the owner must have claimed the IRC 280A(c) deduction in the prior year, in addition to the other criteria.
• Preferences (priority for certain applicants)
  • Preference given to businesses that did not receive more than $10,000 in prior state assistance under specified state orders/laws.
  • Preference for businesses showing financial hardship.
  • Preference for businesses that were operating in 2021 and had revenue of $750,000 or less in the prior year.
• Grant amounts and limits
  • Grants are capped by prior-year revenue, with tiered amounts:
  • Up to $10,000 for businesses with gross revenue in the prior year of $100,000 or less.
  • Up to $25,000 for businesses with gross revenue in the prior year of more than $100,000 (range text implies up to $250,000; exact range in the bill excerpt is somewhat unclear).
  • Up to $50,000 for businesses with gross revenue in the prior year of more than $350,000 but no more than $750,000.
  • A cap is stated for the total amount awarded under this subdivision (the text indicates a cap of $350,000, though the exact structure or applicability of that cap may require final bill language confirmation).
  • No business or individual may receive more than one grant under this subdivision, but a business may qualify for an additional grant if supplemental prior-year tax documentation shows revenue meeting the requirements and the business had been operating for a full year at the time of the original grant application.
• Use of funds
  • Grant money may be used for working capital to cover payroll, rent or mortgage payments, utilities, equipment, and other ordinary business expenses.

Significant Changes to Law

• Updates to the PROMISE grant framework to emphasize location-based eligibility, targeted community criteria, and revenue-based grant tiers.
• Adds explicit preferences to prioritize financially distressed, veteran businesses with prior operation in 2021 and revenue under the specified thresholds.
• Introduces a structured tiered grant approach with defined maximums by prior-year revenue and a program-wide cap.
• Clarifies administration by requiring criteria forms and reporting to be developed by the partner organization and approved by the commissioner, and reiterates the one-grant-per-entity rule with an exception for additional grants if new documentation is provided.

Administrative Details

• The changes modify the existing Laws 2023 chapter 53 article 18 section 2 subdivision 4 (as amended), and are referenced as amended through the 2025 first special session provisions.
• The program remains an economic development tool, with grants awarded by a partner organization under commissioner-approved processes, and funds aimed at sustaining operating activities during economic hardship.

Relevant Terms

• PROMISE grant program
• grants to businesses
• Minnesota
• primary business operations
• community adversely affected
• structural racial discrimination
• civil unrest
• lack of access to capital
• loss of population
• aging population
• lack of regional economic diversification
• gross annual revenue
• prior taxable year
• IRC 280A(c) deduction
• residence-based location
• preference
• financial hardship
• operation in 2021
• revenue thresholds
• grant tiers
• grant amounts: 10,000; 25,000; 50,000
• program cap
• working capital
• payroll
• rent
• mortgage
• utilities
• equipment
• forms and reporting
• commissioner
• partner organization
• Governor’s Executive Order No. 2015-2
• Laws 2020 First Special Session
• Laws 2020 Seventh Special Session
• Laws 2021 First Special Session
• supplementary prior year tax documentation