More Manufacturers Should Think Outside the Border

Let’s say you’re a manufacturer in Owatonna and one day you get an inquiry from a potential customer in Los Angeles or Chicago or Atlanta. Do you respond? Of course you do. When business comes knocking, you answer the door. That’s a no-brainer.

But what if the inquiry comes from Toronto … or Hamburg … or Sao Paulo? What then?

“If you’re like a lot of Minnesota manufacturers, you won’t do anything at all.  You’ll probably ignore it,” says Kathleen Motzenbecker, executive director of the Minnesota Trade Office, pointing out that nationwide more than half of the inquiries companies receive from potential customers in foreign markets go unanswered.

That’s as true here as it is anywhere. About 81 percent of the Minnesota’s manufacturers ship to customers in another state. But only 41 percent ship to another country.   Why so few?

Exports at a Glance

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“A lot of small and midsized manufacturers think it will be too hard or too risky, so they get into this mindset that says ‘We just don’t do that,’” Motzenbecker explains. “Yes, you have to learn some things. But if you go about it deliberately, it’s really no more difficult than what you already do to manage your domestic operations.”There are tremendous opportunities in the international marketplace, and of all Minnesota’s core industries, manufacturers are in the best position to take advantage of them.  Last year, Minnesota companies exported $32 billion in goods, services and commodities to markets worldwide. Manufactured goods accounted for nearly $19 billion (58 percent) of that total.

The impact of those foreign sales goes well beyond the balance sheet of any individual company. Let’s start with paychecks. Manufactured exports generate nearly 115,000 jobs in Minnesota.  About half are manufacturing jobs, the other half support industries such as sales, marketing, transportation and logistics. Exports also generate more tax revenue for the state.

That’s an all-around great performance, no doubt. Still, Minnesota’s manufacturers are far from realizing their full exporting potential, says Motzenbecker, who is the state’s point-person on export and trade promotion.  Her mission is to move more manufacturers into the ranks of exporting companies by getting them to see the opportunities and then helping them prepare to enter their target market successfully.

Understanding the Benefits
Let’s face it, everyone likes more money. When your bottom line and your company are growing, so is that smile on your face. But increased revenue and profits aren’t the only reasons manufacturers should take exporting seriously. Just as compelling: Exporting can make your company more stable and predictable by insulating it from the usual business cycle fluctuations in domestic demand – and they can be a life preserver in the event of a severe, widespread and prolonged economic downturn.

“It’s really unusual for the whole world to go into the dumps at the same time,” says Motzenbecker. “Even during the Great Recession, we had lots of companies telling us that if it hadn’t been for foreign sales (especially in Japan and other parts of Asia), they’d have had to lay-off workers or close their doors. Exports were suddenly 40 percent of their business – because domestic sales fell off a cliff.”

And executives at small and midsized companies that export often report that hustling for business in the international marketplace has made them stronger and more competitive in their home markets.

That’s the case at Delkor Systems, Inc., a leading manufacturer of food-packaging equipment based in Arden Hills, where export sales are an important driver of the company’s growth.

A decade ago, exports (mostly to customers in Canada) accounted for less than 10 percent of Delkor’s new equipment sales, says company president and CEO Dale Andersen. Today, foreign sales have grown to 25 percent, and Delkor’s export markets have broadened to include Mexico, Central and South America, Australia and New Zealand. And last year, the company was honored by Gov. Mark Dayton with an award for exporting success.

But none of it happened overnight.

By the time Andersen made the decision to invest time, money and effort in Latin America, he had visited his target markets many times over several years to assess their true potential.  At industry expos, trade shows, and on trade missions he got to know customers and their needs; he learned about market constraints; he sized up his competition; and eventually, he clearly identified Delkor’s competitive niche.

It’s a game plan that Andersen thinks other Minnesota manufacturers interested in exporting would do well to employ.

“It is strategically important for a business to understand the competitive landscape outside the United States. You just can’t do that from a distance. Go to the shows. Visit the customers. You have to get out there,” says Andersen.

That kind of on-the-ground market intelligence is a crucial investment that can pay-off two ways:

  • It can lay the foundation for a successful market entry
  • It can keep you from making investments in markets where the timing is not right or where you never really had a chance to succeed.

Other advice that Andersen offers manufacturers considering exporting:

“It’s not for everyone, but if you do see opportunity, it’s important to explore it. Don’t rush. Don’t just jump in,” he says, noting that impulsivity can lead to costly mistakes. “Be strategic and just take it in steps.”

The MTO’s Motzenbecker couldn’t agree more. To go from thinking about exporting to getting your company export-ready and entering a market is a deliberate process that requires careful thinking all along the way, no question about it, she says.

And all processes have a beginning.  “The first step is for more Minnesota manufacturers to consider the possibility – to see the full potential – of exporting their products to foreign markets,” says Motzenbecker. “The next step is to call us at the MTO. We’ll help you take it from there.”

Learn More
Curious about how  the Minnesota Trade Office can help you explore opportunities in exporting? Call 651-259-7499 or toll free at 800-657-3858. To speak with an international trade representative about specific market or industry questions, call the MTO’s Trade Assistance Helpline at 651-259-7498 or email

The Last Word
Kathleen Motzenbecker, executive director of the Minnesota Trade Office, talks about why manufacturers are well positioned to export to foreign markets.

Low-Cost Brain Power for High-Tech Companies

Here are two business problems with one ingenious solution.

Problem One: Young high-tech companies often find themselves strapped for cash until their great ideas can be and turned into commercial success. Trouble is, getting high-tech products to market extra fast takes a lot of extra brain power. And brain power doesn’t come cheap.

Problem Two: Young college students in the science, technology, engineering and math (STEM) disciplines often have trouble breaking into high-tech industries because they lack of applied skills and experience to supplement their coursework.

Solution for All: SciTechsperience Interships offered through the Minnesota High Tech Association and the Minnesota Department of Employment and Economic Development.SciTechsperience

“Internships provide a low-cost solution that helps businesses bring ideas and products to market faster,” says the MHTA’s Becky Siekmeier, who directs the SciTechsperience program.

The program matches college students enrolled in STEM programs with small and mid-sized companies that need their skills. This fall, the program plans to place at least 100 students interns with high-tech companies statewide.

Companies get the brain power and skilled workers they need at an affordable rate. They receive a dollar-for-dollar cash match up to 50 percent of the intern’s wages ($2,500 maximum), providing a low-cost solution for small and medium-sized companies that otherwise would not have access to qualified interns.

Students chalk up valuable hands-on experience, not to mention they get a foot in the door at some up-and-coming companies.

Taxpayers get jobs and expanded tax base as the companies succeed and grow. And the state’s science and technology industries benefit because we keep talented STEM students in Minnesota.

Everybody wins.

Eligibility Requirements for Businesses

Participants must be for-profit companies eligible to conduct business in Minnesota; have fewer than 150 employees in the Twin Cities metro area or fewer than 250 employees in Greater Minnesota; must provide a hands-on experience for interns; and must be engaged in one of the following industries:

  • Aerospace and Defense
  • Agriculture, Food, Forestry
  • Biotechnology, Life Sciences and Health IT
  • Engineering Services
  • Fuels, Energy, Energy Management
  • IT/Computer Technology
  • Mining, Materials, Manufacturing and Processing

See full business eligibility requirements.

Eligibility Requirements for Students

Students must be a Minnesota resident at least 18 years of age in good academic standing with at least a 2.5 GPA at an accredited U.S. college and in an approved high-tech curriculum. College juniors, seniors and technical college students in the second year of their program will be considered.

See full student eligibility requirements.

Get More Information and Apply

Prospective and companies can apply online. More details about the program are available on the MHTA website. Or contact Becky Siekmeier at or 952-230-4241.

Taking License: Your Business Might Need One Before Launch

You’ve cleared some of the initial hurdles on the way to launching your own business.

You’ve committed yourself, chosen and registered a business structure and name. Everything’s off to a good start.

Business License 2Before you race too far ahead, you need to find out whether any aspect of your operation requires a license or permit and then factor into your planning the time it will take to go through the permitting process.

All kinds of businesses operate in Minnesota with no special permission or constraints. But others are closely regulated and may require one or more business, occupational or environmental licenses or permits.

Licenses and permits protect consumers and advance broad social goals that benefit everyone – environmental protections for land, water and air, for instance.

Generally speaking, licenses and permits:

  • Certify the competency of individuals in business, trades and professions.
  • Ensure the safety and effectiveness of products and processes.
  • Help prevent fraud and ensure financial solvency in business transactions.
  • Control market access or the development or implementation of new technology.
  • Promote responsible use of natural resources, especially non-renewable resources.

How to Find Out if You Need a License
Typically issued at state and local levels (though there are some federal licenses), a business license is a legal authorization to operate a business in a city county or state. In most cases, you’ll pay a fee to the licensing jurisdiction.

Start by using License Minnesota, the state’s web portal, to find out if you’ll need any state-required licenses, permits or registrations to operate your business.

The system is pretty easy to use. Use the first dropdown box to select the topical group of licenses. Select “Business.”

License Minnesota1

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Now, choose a subgroup in the second dropdown box. We’ll choose “Child Care” for this illustration.

License Minnesota2

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You narrow your search even more by choosing another subgroup. We’ll choose “Child Care Centers.”

License Minnesota3

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Finally, select a specific license in the fourth dropdown. You’ll see a page detailing all the licensing requirements, registrations, certifications, credentialing, schedules, and fees, along with information about the state agencies that issue the licenses.

License Minnesota4

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In addition to the licensing requirements imposed by the state, many local governments also require licenses for certain kinds of business activity.

In some cases, cities and counties may require a general business license that involves no more than registration and payment of a fee. In other cases, it may involve compliance with local ordinances specific to a particular type of business.

For instance, commercial building contractors are not licensed by the state, but many cities require them to register with the city and be bonded before the cities will issue building permits or conduct inspections of their projects.

Larger cities like Minneapolis and St. Paul have licensing departments. Smaller ones may rely on the city clerk. In any case, a phone call or visit to your city or county offices can help you determine whether or not you need to meet local requirements.

Many local governments make business license information and application forms available online. You just download and complete the documents, mail them in or file them in person.

Some cities allow you to complete the entire process online. Once your application is reviewed and approved, you may pay your fees through a secure website and print your license.

No matter how you apply for a license, it’s easier if you all have of the necessary information at hand before you begin completing the applications, including tax or other business identification numbers, certificates of assumed name under which the business will run, and business organizational documents filed with the Secretary of State.

Other Regulations
There may be other permits you must obtain or regulations with which you must comply, depending on your business. You need to know whether your business must comply with local zoning restrictions, whether it requires environmental permitting and review, or whether you’ll be subject to performance bond requirements. It’s important to remember that certain issues may affect you even if you operate a business out of your home.

Contact local zoning boards or planning commissions to determine if there are any regulations surrounding the space in which you plan to operate your business. Zoning ordinances of each local community spell out the land-use rules and the procedures for petitioning for a variance.

Remember, it pays to ask questions about licensing, permitting, registration and regulation early in the planning stages. Be thorough. Err on the side doing too much homework. If you overlook or ignore these issues, you place your business at risk of being shut down until you comply and fined.

Learn More
Consultants at our Small Business Assistance Office can help you understand more about business licensing. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide.

For a comprehensive look at business licenses and permits, see our Guide to Starting a Business in Minnesota. Available for download in PDF, formatted for e-readers, or available in print (all free of charge), the book covers the major issues, questions and concerns about business startups.

Nothing we cover in this blog should be taken as legal advice. It’s not. And it’s no substitute for the professional guidance of a lawyer or accountant.

Export Seminars Focus on Benefits for Small Business

Ask owners of small and midsized companies what scares them most about expanding their sales or business operations into foreign countries, and the answer is predictable.

“Risk,” says Ed Dieter, deputy director of the Minnesota Trade Office (MTO), the state’s official export promotion agency, ticking off the top reason small companies with great potential shy away from exporting. “They worry they won’t get paid, that it’s too easy to lose their shirts. They’ll say, ‘Look, I get stiffed often enough at home. Why would I take that chance overseas, where there’s nothing I can do about it?'”

Exports at a Glance

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Fortunately, there are several federal and state programs to help small and midsized companies overcome those obstacles and compete – and profit – in the global marketplace.

Money and Expert Advice
Let’s start with expertise and capital. The MTO has a team of business consultants specialized in international trade.They provide market, industry and technical expertise; offer export courses and workshops; and bring delegations on trade missions and to international trade shows. Services are provided without charge or at a nominal fee.

To help defray the cost of exploring foreign market opportunities, the MTO and the U.S. Small Business Administration have teamed up to offer export assistance grants (called STEP Grants) of up to $7,500 for a wide range of export-development activities, including trade missions, trade shows, product testing and certification.

The U.S. Commercial Service has consultants in more than 100 U.S. cities and more than 75 countries to help U.S. companies start and expand their sales in foreign markets. And the Export-Import Bank of the United States and the SBA have a variety of finance programs ranging from working capital and loan guarantees to credit insurance.

Reducing the Risks
While calculated financial risk is a part of any business, those concerns can make companies reluctant to invest in facilities, equipment, and personnel in other countries, especially in developing markets, which can present a variety of political risks beyond an investor’s control, says Larry Spinelli of the Overseas Private Investment Corporation, a U.S. government agency that helps U.S. companies do business in more than 150 countries worldwide.

OPIC’s financing programs and political risk insurance can insulate companies against losses due to war, civil instability, and terrorism. But it also protects against government actions that ill-affect your company, such as interference in your contracts, taking your property, or refusing to let you take profits out of the country.

“If something happens, we’ll pay you, make you whole, and we’ll step into your shoes,” says Spinelli.


Naming Rights … And Wrongs

Shakespeare posed the famous question: “What’s in a name?” Well, when it comes to business, there’s more than you might think.

Depending on the type of business organization you choose, there are rules to follow and official documents to be filed.

Naming Your Business Infographic

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Got the perfect name in mind? Good for you. But don’t assume you’re good to go just yet.

About Assumed Names
Any person or partnership that conducts or transacts business in Minnesota under a name that is different than the full, true name of each owner or partner must register the name of the business by filing a certificate of assumed name with the Secretary of State.

It’s also required of corporations, limited partnerships, limited liability partnerships or limited liability companies that do business under a name that is different from their exact legal names.

So, if partners John Grimey and Jerry Grungy do business as Grimey and Grungy Janitorial Service, they must file a certificate of assumed name. Filing is not required if they do business as John Grimey and Jerry Grungy Janitorial Service.

Likewise, if the corporation Able Building Company does business as ABC Construction, it must register the assumed name. There’s no requirement to file if it does business under the name Able Building Company, since that is the company’s exact legal name.

There are some other important restrictions:

  • Assumed names may only include designations like “Inc.,” or “LLC” if that is in fact its actual legal structure. For instance, if Larry Smith is a sole proprietor, his company’s assumed name may not be Smith Realty, Inc., since it is not actually a corporation.
  • Assumed names may not include geographic references to a place or community if the business is not located there.
  • Financial institutions wishing to use an assumed name must first receive approval from the Minnesota Department of Commerce.

Why is Filing Required?
A certificate of assumed name provides consumers with important information about the identities of business owners. You should note that registration does not protect the name against other people using it. You’ll have to take separate legal measures to ensure no one else does that. (And registering a website domain name or federal trademark is an entirely different process from making any filing with the secretary of state.)

Is Your Assumed Name Available?
Your assumed name won’t be accepted if it is the same as – or can’t be distinguished from – the name of a corporation, limited liability company, limited partnership, limited liability partnerships or state trademark that is already on file with the Secretary of State.

In most cases, if the assumed name you choose contains a different word from other assumed names already on file, it would be considered distinguishable and acceptable. But there are several important exceptions, including articles of speech, conjunctions, contractions, punctuation, abbreviations, corporate endings, and word spacing, among others.

It’s best to make a quick phone call to the Secretary of State’s office (651-296-2803) or visit the website to see if the assumed name you’d like is actually available. They’ll do a quick check, but won’t guarantee the name will be available by the time you file, since you cannot reserve an assumed name. You can also verify the availability yourself using the Secretary of State’s online system.

Sole proprietorships and partnerships that intend to incorporate at a later date may reserve a corporate name by filing the appropriate forms with the Secretary of State. If you plan to incorporate later, you’ll want to make sure that your planned name isn’t already taken.

Filing Your Assumed Name
Download the certificate of assumed name form online or request one by mail. It’s a simple, one-page document. Complete and submit the form along with the filing fee. Or file online. After the Secretary of State notifies you that the filing has been accepted, you must have the certificate published for two consecutive issues in a newspaper qualified to print legal notices in the county where the registered office or principal place of business is located.

The certificate of assumed name is valid as long as you file an annual renewal, which you can do online. If other information on the certificate changes, you must file an amendment with the Secretary of State within 60 days.

Now, let the names begin.

Learn More
Consultants at our Small Business Assistance Office can help you understand more about naming and registering your business. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide.

For a comprehensive look at how to name your business, see our Guide to Starting a Business in Minnesota. Available for download in PDF, formatted for e-readers, or available in print (all free of charge), the book covers the major issues, questions and concerns about business startups.

Nothing we cover in this blog should be taken as business or legal advice. It’s not. And it’s no substitute for the professional guidance of a lawyer or accountant.

Unemployment Insurance Basics for Employers

From the standpoint of an employee, unemployment insurance is pretty straightforward. You get laid-off  or lose your job in some way that’s not your fault, so you apply for unemployment insurance benefits and the cash you receive (while only a partial replacement of your wages) helps tide you over until you find a new job.

From an employer’s standpoint, there’s much, much more to know. There are state and federal laws to follow, report deadlines to meet, tax returns to be filed and payments to be made.  And mistakes can prove costly.

Let’s start at the beginning. The money for the unemployment insurance benefits that employees receive comes from special state and federal taxes, commonly called unemployment insurance taxes, paid by employers.

Whether or not a business is required to report wages and pay unemployment insurance taxes depends on the amount and type of employment, the amount of wages paid, and other special factors.

Registering for a UI Employer Account

All businesses that pay wages to employees who perform covered services in Minnesota are required to register with the Minnesota Unemployment Insurance Program. You can do that online or by phone — and you should register as soon as possible after wages are paid to employees to avoid missing important deadlines. The UI program then determines whether you are required to report the wages and pay Minnesota unemployment insurance taxes.

Here are some business entities that DO NOT need to register for an employer account:

  • Sole proprietorships whose only employees are the spouse, parents, or minor children of the owner
  • Corporations and limited liability companies whose only employees are owner-officers who directly or indirectly own 25 percent or more of the business and have not chosen to be covered under the Minnesota Unemployment Insurance program
  • Partnerships whose only workers are the partners.

Tax Rates

The unemployment insurance tax rate that your company will pay depends on a few factors:

  • The base UI tax rate, which can change, depending on the balance in the Minnesota Unemployment Insurance Fund
  • Whether yours is a new or existing business
  • Whether your company has a history of lay-offs
  • Whether your industry has a history of lay-offs
  • Whether the state requires additional or special assessments

Reporting and Paying UI Taxes

Minnesota employers must file wage reports, called Wage Detail Reports, and pay unemployment insurance tax on a quarterly basis. All covered wages to full- and part-time employees during the quarter must be reported, including commissions, bonuses, tips, as well as the cash value of pay that comes in a form other than cash.

Not all covered wages are taxable. Unemployment insurance tax is only paid on wages up to an annual taxable maximum per employee. That maximum is $29,000 for the 2013 calendar year.

Quarterly Wage Detail Reports  for each employee include:

  • Full name
  • Social Security Number
  • Total wages paid during the quarter
  • Number of hours worked during the quarter
  • Work location

Employers must also report the total number of covered workers who worked or received pay during the payroll period which included the 12th of the month for each month of the quarter.

Wage detail reports and the related taxes and other assessments are due within one month after the end of each calendar quarter. The reports are required from all covered employers, even if they have had no employees during the quarter and owe no tax.

UI Seminar For Employers This Week

Employers, HR professionals, attorneys, accountants and other business consultants can learn a lot more about employer responsibilities for unemployment insurance during seminars offered this week by the Minnesota Department of Employment and Economic Development’s Unemployment Insurance Division.

Experts will explain how your unemployment insurance
tax rates are determined, how an applicant’s eligibility for unemployment
benefits can affect your business, and what you can do to prevent unnecessary
charges to your UI account.

They’ll also cover such key issues as:

  • Covered versus non-covered employment: Who’s in, who’s out and why?
  • Are your independent contractors really independent?
  •  Do family members working in your business need coverage?
  • The most important new unemployment legislation and how it could affect your workplace.
  • Step-by-step instructions for using the Employer Online Self-Service System and why you need to know how it works.
  • Important follow-up you must do once you’ve dismissed a problem worker.
  • How detailed, accurate documentation can save your company money in the long run.
  • The costly mistakes managers make when they file an unemployment appeal or raise an issue and how to avoid them.
  • Tips to help you avoid common mistakes in submitting quarterly Wage Detail Reports.

Seminars will be held this week in these cities. The advanced registration period has passed, but you may still register in person the day of the seminar.

Mankato  – Tuesday, Sept. 10 – 8:30 a.m. to noon
South Central College, Conference Center
1920 Lee Blvd, Mankato, MN
Contact: Randy Long at 507-389-5770

Worthington – Wednesday, Sept. 11 – 8:30 a.m. to noon
Minnesota West Community and Technical College
1450 College Way – Room 210
Worthington, MN
Contact: Denise Myhrberg at 507-537-6236

Marshall  – Thursday, Sept. 12  – 8:30 a.m. to noon
Lyon County Courthouse, Rooms 1-3
607 West Main Street
Marshall, MN
Contact: Denise Myhrberg at 507-537-6236

Moorhead MN – Thursday, Sept. 26, 2013 – 8:30 a.m. to noon
Concordia College
Offutt School of Business – Barry Auditoruim
1310 8th St. South
Moorhead, MN.
Contact Amanda Nygaard at 218-299-3307
Register online for this seminar by Sept. 24.

Big Buzz on Small Biz: $2.8 Million in Targeted Assistance Grants

Word is spreading about $2.8 million in state grants to provide consulting services and technical assistance to targeted small businesses statewide.

DEED announced last week that it has awarded two-year grants to 11 nonprofit groups that provide business development services to targeted groups, including women, minorities, rural residents, bioscience startups, entrepreneurs and inventors.

The funding is meant to help support innovative small businesses and entrepreneurs, bolster economic activity in low-income neighborhoods and communities, and assist minority-owned businesses with the training and technical assistance that increase the likelihood of success.

“These service providers help businesses start and survive during the early stages of their development,” explains DEED Commissioner Katie Clark Sieben. “Their services and programs are good for business and good for Minnesota.”

Traditional media coverage (see articles in MinnPost and the Brainerd Dispatch) coupled with word spreading on the web, via social media, and through business development organizations and networks means there’s already a lot of interest in the services.

Here’s a brief profile of what the grant recipients do to strengthen small business and stimulate job growth in Minnesota. If you’re already in business and need assistance, or if you’ve been thinking about starting out on your own, it’s a good time to make an appointment with one of these organizations to see how they can help.

African Development Center, Minneapolis, $200,000 – The group provides training, lending and technical assistance to help African immigrants and refugees achieve economic prosperity.

BioBusiness Alliance of Minnesota, St. Louis Park, $450,000 – The BioBusiness Alliance provides services and outreach to businesses in the life sciences.

Central Lakes Community College Small Business Development Center, Brainerd, $84,000 – The center provides programs and services for small businesses and entrepreneurs in the Brainerd area.

Metropolitan Consortium of Community Developers, Minneapolis, $190,000 – The consortium is an association of community development groups that focus on housing and economic development initiatives.

Metropolitan Economic Development Association, Minneapolis, $380,000 – The group provides assistance to businesses owned and managed by entrepreneurs of color.

Minnesota Inventors Congress, Redwood Falls, $170,000 – The group offers resources for Minnesota entrepreneurs and sponsors two annual shows, the Invention and Idea Show and the Minnesota Student Inventors Congress.

Minnesota State University Small Business Development Center, Mankato, $280,000 – The center provides programs and services for small businesses and entrepreneurs in the Mankato area.

Neighborhood Development Center, St. Paul, $340,000 – The center offers small-business training and consultation in low-income neighborhoods.

Northside Economic Opportunity Network, Minneapolis, $143,500 – The goal of this group is to expand economic opportunities and build wealth for north Minneapolis residents through the creation, growth and development of small businesses.

Southwest State University Small Business Development Center, Marshall, $140,000 – The center provides programs and services for small businesses and entrepreneurs in the Marshall area.

WomenVenture, St. Paul, $330,000 – WomenVenture helps women entrepreneurs, low-income entrepreneurs and women-owned businesses to develop and expand businesses and create jobs.