Steps to apply

A Qualified Project, as defined by the  MnCIFA statute, is a project, technology, product, service or measure promoting energy efficiency, clean energy, electrification, or water conservation and quality that is in Minnesota, pays the prevailing wage, and has at least one of the following impacts:

• Substantially reduces greenhouse gas emissions;
• Reduces energy use without diminishing the level of service;
• Increases the deployment of renewable energy projects, energy storage systems, district heating, smart grid technologies, or microgrid systems;
• Replaces existing fossil-fuel-based technology with an end-use electric technology;
• Supports the development and deployment of electric vehicle charging stations and associated infrastructure, electric buses, and electric fleet vehicles;
• Reduces water use or protects, restores, or preserves the quality of surface waters; and/or
• Incentivizes customers to shift demand in response to changes in the price of electricity or when system reliability is not jeopardized.

Per the MnCIFA statute, MnCIFA will give preference to Qualified Projects that: 

• Maximize the creation of high-quality employment and apprenticeship opportunities for local workers consistent with the public interest, especially workers from Environmental Justice Communities, labor organizations, and Minnesota communities hosting retired or retiring electric generation facilities, including workers previously employed at retiring facilities;
• Utilize energy technologies produced domestically that received an advanced manufacturing tax credit under section 45X of the Internal Revenue Code, as allowed under the federal Inflation Reduction Act of 2022, Public Law 117-169;
• Certify, for all contractors and subcontractors, that the rights of workers to organize and unionize are recognized;
• Agree to implement a project labor agreement.

During a strategic call for applications, MnCIFA will additionally give preference to projects which meet the call for applications’ strategic goals.

Applicant Track Record

All projects must be within the demonstrated competence of the proposed management, which should be demonstrated by a recent, proven record of success in the same or a closely related business as evidenced by the most recent three years of historical financial statements, demonstrating a record of revenue generation and successful business operations. 

Loan Size

MnCIFA can work with co-lenders to bring sufficient resources to larger projects and to increase the development impact of the transaction. Per MnCIFA statute, MnCIFA cannot provide loans to a single entity in an amount less than $250,000. However, MnCIFA can provide financing to a revolving loan facility or to portfolio of smaller projects that, in the aggregate, exceed the $250,000 minimum. Generally, MnCIFA loans are under $5 million.

Tenor

The loan tenor is typically between 2 and 7 years, depending on the type of project and debt servicing capability. For MnCIFA loans, it is common to allow a grace period on principal repayment at the beginning of the term; however, each transaction will be evaluated on a case-by-case basis. 

Leveraging Other Financing Sources

MnCIFA’s statute requires that the authority “leverage private investment in qualified projects, with the aim of achieving a high ratio of private to public money invested through funding mechanisms that support, enhance, and complement private lending and investment.”  MnCIFA prefers to fund projects in which the borrower brings at least 50-70% of the funding to the project through private lenders, private grants or donations, utility rebates, and other sources of private equity.  In most cases, MnCIFA would not fund a project as sole financier. 

Costs

Through our statutory authority, MnCIFA is able to offer flexible loan terms. Interest and fees will vary depending on the project. A summary of key costs is presented below. Please consult with MnCIFA for more information.

• Origination Fee: A one-time fee to be paid at the time of first disbursement. (1.0% on loan amounts up to $2,000,000, plus 0.5% on any amount exceeding $2,000,000.)
• Interest Rate: A risk-adjusted spread over the base cost of funds (U.S. Treasuries). MnCIFA’s spread is based on our assessment of risk and notching factors, including job creation, benefits to Environmental Justice Communities, and geographic diversity.

• Early Review – Preliminary Application Form: MnCIFA will evaluate the proposed project and its alignment with MnCIFA’s definition of a Qualified Project.
• Early Review – Loan Application: MnCIFA will then request the project sponsor complete a comprehensive Loan Application, which includes answering Labor and Development Impact Labor Questions and providing supplemental documentation (e.g., audited financial statements, business plan, etc.).
• Due Diligence: Due diligence includes assessment of business potential, financial viability, debt service coverage, counterparty review, and a potential site visit.
• Approval:  Projects that pass MnCIFA review and approval then move to the Board of Directors. Firstly, projects will go up for review by the Board’s Credit Committee. Then, if approved, the project will go up for review and final approval by the full Board. MnCIFA funds are encumbered upon Board of Directors approval for a period of no more than one year after the loan closing date.
• Project Close: For projects with Board approval, MnCIFA and the project sponsor will then fulfill all closing documentation requirements and sign the loan agreement. Funds are disbursed to the borrower, usually in tranches.
• Monitoring: MnCIFA monitors the credit and development impact of all projects for the life of the loan.