Giving a cooperative a loan, grant or other local assistance

A cooperative's ability to receive a particular loan or grant depends on the grantor's authority and the program's eligibility rules. The business-subsidy statutes may add requirements; they do not themselves establish eligibility for every assistance program. Chapter 308B separately matters to who authorizes the agreement, what the cooperative may do with the money, and how its membership structure fits application forms [@P1; @L3; @L5; @L6].

Does the business subsidy law apply?#

The statute defines "business subsidy" broadly. It covers grants, contributions of property or infrastructure, below-market loan principal, tax or fee reductions or deferrals, loan or lease guarantees, and preferential use of government facilities. Subdivision 3 then lists 23 exclusions, including subsidies below $150,000, loans or guarantees of $150,000 or less, assistance generally available to a class of businesses, and housing assistance. Read every applicable exclusion and the separate criteria/reporting rules below ^L5.

A cooperative can be a recipient, but nonprofit treatment is narrower. Section 116J.993 defines a recipient as a for-profit or nonprofit business entity receiving a subsidy; a nonprofit must have at least 100 full-time-equivalent employees and a highest-to-lowest-paid employee wage ratio over 10 to one. Chapter 308B defines its cooperative as a legal business entity. Neither that status nor the subsidy definition proves eligibility for a particular program ^{P1, § 308B.005, subd. 7; @L5, subd. 6}.

"Local government agency" is broad. It includes statutory and charter cities, housing and redevelopment authorities, towns, counties, port authorities, economic development authorities, community development agencies, and certain entities created by them ^L5.

Different duties have different thresholds. For adopted subsidy criteria, section 116J.994, subdivision 2 expressly overrides the exclusions in section 116J.993, subdivision 3, clauses (1) and (21): its thresholds are subsidies of $25,000 or more and loans/guarantees of $75,000 or more. This is not an unexplained conflict and does not make every other duty apply at those amounts. Subdivision 8(b) separately requires reporting for specified smaller assistance. Counsel should apply each subdivision to the transaction [@L5; @L6].

If it applies: what the statute requires of the grantor#

The following is a partial map of the 2025 edition rechecked on 2026-10-16 ^L6:

• The assistance must serve a public purpose.
• The grantor must adopt written criteria, after a public hearing, before granting a subsidy; criteria cannot be adopted case by case.
• The recipient must enter into a subsidy agreement with the grantor. It must include a description of the subsidy, the public purposes, measurable goals, the recipient's financial obligation if the goals are not met, why the subsidy is needed, a commitment to continue operations in the jurisdiction for at least five years after the benefit date, the name and address of the recipient's parent corporation, if any, and a list of all financial assistance for the project.
• Grants must be structured as forgivable loans; subdivision 3 also requires a financial review under section 16B.981 before awarding a business subsidy.
• Both parties must sign, and a local grantor's agreement must be approved by the local elected governing body (with exceptions for certain port authorities).
• Before a local grantor grants a subsidy above $150,000, it must give public notice and hold a hearing, unless a hearing is otherwise required by law.
• Before signing, the grantor must check the state's compilation report for eligibility. A recipient failing an earlier agreement is ineligible for five years or until satisfying the repayment obligation, whichever occurs first ^{L6, subd. 6}.
• Job and wage goals generally must be met within two years. Zero job-creation or retention goals require the statutory public-hearing determination; extensions and repayment have additional conditions ^{L6, subds. 4, 6}.
• Recipient progress reports are generally due March 1 to the grantor; grantor reporting to the commissioner is generally due April 1. These duties have separate coverage, duration and exceptions, including subdivision 8(b)'s smaller-assistance reports. Do not infer reporting exemption solely from the $150,000 exclusions ^{L6, subds. 7-8}.

What the cooperative statute adds#

Fit problems to anticipate#

• "Parent corporation." The subsidy agreement asks for the parent corporation of the recipient, if any ^L6. A cooperative's members are not a parent corporation in any ordinary sense, but a cooperative may have members that are corporations or other cooperatives. The statute does not say whether that is a "parent". Ask your attorney how to complete the field; see Chapter 308B questions, drafting observations and resolved filing issues.
• Equity and ownership questions. A cooperative's capital comes through the membership structure its bylaws set up; see Raise member equity and capital. A request for "ownership percentages" may not map onto that structure; see Licensing, zoning and permits when the applicant is a cooperative.
• Economic development authority powers. A city or county that has created an economic development authority (EDA) has the powers in Minnesota Statutes section 469.101. As we read the 2025 text, they include making contracts for economic development, accepting assistance and, in the "use of proceeds" subdivision, using the proceeds of obligations the authority has issued to make or purchase loans for economic development facilities, with "persons, firms, public or private corporations, federal or state agencies, and governmental units" ^L3. That subdivision does not name cooperatives, and whether a particular EDA may lend to a cooperative is a question for the EDA's attorney. Other subdivisions we did not analyze cover equity-type investments in small-business capital funds and sale of loan instruments ^L3.

What to look up locally#

1. Your EDA or other authority's enabling act, bylaws and adopted subsidy criteria.
2. Your financing policy (loan underwriting, collateral and guarantee standards).
3. Whether any other program you plan to use (TIF, abatement, HRA, port authority, state or federal funds) has its own eligibility rules about entity type. We did not open these.
4. Whether the state's subsidy-compliance reports apply to your grantor.