Quality child care is vitally important to everyone living in the northwest region: parents and caregivers who work or attend school, the child care sector itself, employers and of course, the children. The child care finance program was created to recognize and support the child care providers in northwest Minnesota.
- Increase child care slots in the region.
- Increase the number of Parent Aware rated child care providers and/or those providers who are already rated and are moving up the rating scale.
- Retain existing child care slots.
Eligible borrowers: Child care providers located in the following Minnesota counties: Beltrami, Clearwater, Hubbard, Kittson, Lake of the Woods, Mahnomen, Marshall, Norman, Pennington, Polk, Red Lake and Roseau.
Eligible Uses: costs incurred to obtain a child care license, costs to obtain a Parent Aware rating or increase your rating, costs for safety improvements as required by county licensing authority. Other costs that could be considered: toys, furniture, equipment, or other costs that directly benefit the child care business. Debt refinancing not allowed UNLESS the original debt was taken to satisfy licensing requirements or safety issues. Proof of satisfying licensing requirements or safety issues is required.
The Northwest Minnesota Foundation will provide funding for organizations working to improve child care quality or child care availability. NMF has developed three potential funding areas that applicants can use to determine if they are eligible for funding: Child Care Availability & Quality, Early Childhood Education, and High School Child Care Careers (Workforce Development).
Loan Terms (For existing providers keeping same license capacity)
Loan Amount: up to $ 5,000
Interest Rate: 1.5%
Term: up to 5 years
Note: The interest rate can be reduced to 0.5% during the loan term, for the following factors: the child care business becomes Parent Aware rated or increases the Parent Aware rating. Documentation is required.
Loan Collateral: a lien will be taken on child care business assets. The lien filing fee ($ 20.00) is collected at loan closing.
Credit Report and Loan Workup Costs: $ 25.00 (Waived)
Additional Resources: monthly e-newsletter, also eligible for small grants to be used for training fees, consultant fees, legal or accounting fees, or other “brain power” activities that benefit the child care owner and business. Funds can’t be used to purchase physical assets. ++
Monthly loan payments processed electronically though a bank account. Verification of active license and number of slots to be reviewed quarterly with borrower and also verified with the Department of Human Services.
Loan Terms (For new providers or existing providers changing license to increase capacity)
Loan Amount: up to $ 5,000
Interest Rate: 0.0%
Term: up to 5 years
Repayment Schedule: no payments; a portion of the loan principal will be written off each month to term end; loan is contingent on an active child care business and maintaining slots; verification of active license and number of slots reviewed quarterly with borrower and with the Department of Human Services. An IRS form 1099-C (Cancellation of Debt) is issued each year for the principal portion written off. If the child care business closes, notice will be given that the remaining loan balance is due and payable. However, there will be no collection activity or other costs. Borrowers are eligible for these terms ONCE.
Loan Fees: NONE
Electronic Loan application process: one page loan application*; please allow 10 business days for loan processing; Loan closing at your location and your convenience. Note: NMF accounting department can issue loan checks usually within five business days of loan approval.
Frequently Asked Questions
Both types of financing are considered loans, but the forgivable loan is not paid back. Each year of the loan, a portion is forgiven so that by the end of the loan term, the loan balance is zero. Each year an IRS form 1099-C (cancellation of debt) will be prepared and submitted to you and the IRS for that year’s amount that has been forgiven. This amount is considered Income to you, so you should discuss it with your tax preparer.
The low interest loan will have regular monthly payments at 1.5% with a term as high as five years. The approximate monthly payment for a $ 5,000 loan at 1.5% for 60 months is $ 86.55.
The low interest loans start at 1.5% with a maximum five year term. If you have a ParentAware rating at the time of application, the interest rate is reduced to 0.5%. Further, if you become ParentAware rated during the loan term, the interest rate will be reduced to 0.5% for the remainder of the term.
My loan request Child Care Business
$ 1,500 at least 12 months providing child care
$1,501 – $ 2,500 at least 24 months providing child care
$ 2,501 – $ 3,500 at least 36 months providing child care
$ 3,501 – $5,000 at least 48 months providing child care
If there is any question about what is eligible, please do not hesitate to ask. This is not a comprehensive list, and there are a lot of other eligible uses.
The low interest loan is a special part of our regular microloan program, so applications will be accepted on an ongoing basis.