Loan Programs

Loan Programs

The 1200 Fund provides incentive, expansion support, childcare and startup loan options for businesses in multiple phases of growth within the City of Duluth.  With the funding provided, businesses create new jobs, childcare availability, and the ability to bring a business continued success.  Loans from the Duluth 1200 Fund are intended to address a gap in the financial package necessary to complete a project, not replace business owner equity contributions or traditional bank lending.

Loan Amounts: maximum of $500,000.

Eligible Applicants: This program is directed toward existing businesses, which have been in operation three or more years. New business start-ups are not normally eligible.

Other Funding Sources are Required: Typically a minimum ratio of two private dollars to one Duluth 1200 Fund dollar will apply. A bank loan will be required for an amount at least equal to the Duluth 1200 Fund Loan. Personal guarantees may be required for privately held corporations.

Other Special Requirements: Loans may not exceed $10,000 per job created. Business must be located or willing to be located in the City of Duluth.

Allowable Use of Proceeds: Low interest financing for up to 1/3 of the total cost of the project is available to service (non-personal and non-retail), wholesale, and manufacturing businesses uses.  Loans are not available to legal, architectural or financial services businesses, non-profits or retail (restaurant or retail shops).

Term of Loan: This program provides fixed rate financing for fixed assets (building) for a term of up to 17 years and machinery and equipment for a term of up to seven years and working capital for a term of up to five years.

Interest Rate: The interest rate varies but typically between 3% and 8%.
The Advance Loan Program provides gap financing for Duluth business start-ups city wide.  Loan must be utilized to purchase and make improvements in existing real estate building that will house the new business.

Loan amount: maximum of $50,000

Term of loan: Up to 17 years

Other special requirements: Unlike the General Loan Program, there is no requirement related to creation or retention of job and the business can be retail in nature.  A bank loan and owner equity must be included in the project financing package.

Loan forgiveness: Up to 50% of the loan may be forgiven if two full-time or full-time equivalent jobs are created on the site within the first two years of operation.
This loan is created to assist small businesses with their start-up business needs, this is done by developing a business mentor relationship that ensures loan requests are developed with enough support to thrive. The Mentorship Loan can help businesses fund critical projects, and to build business credit and payment history which is critical when seeking larger investments in the future, while connecting business owners to local mentors and business development specialists.

Loan amount: $3,000 - $15,000

Term of loan: 5 - 10 Years, based on the loan amount
Other special requirements: Applicants must currently or within the past 6 months, have conducted a business consultation with the Small Business Development Center (SBDC) in Duluth.  The applicant is required to be working with a business mentor.

The Pay for Performance Incentive Loan program provides gap financing for manufacturing and high tech services businesses starting up or expanding within Duluth city limits.

Loan amount: maximum of $500,000

Term of loan: up to 17 years

Loan forgiveness: $5,000 forgiven for each full-time job created paying a salary that exceeds $50,000; forgiveness limited to 50% of the loan.

Other requirements: must create a minimum of eight new jobs with wages in excess of $50,000 annually, plus benefits to qualify for a Pay for Performance Loan.

The Childcare Loan Programs provide gap financing for licensed Duluth childcare providers who are starting up or expanding within Duluth city limits. The three programs are as follows: the Childcare Loan Program, Childcare Incentive Program and the 1200 Fund Childcare Collaboration Grant.

Loan amount: Childcare Loan – minimum of $10,000; Childcare Incentive Program - maximum of $50,000; 1200 Fund Childcare Collaboration Grant- maximum of $100,000.

Term of loan: up to 17 years

Loan Forgiveness: The Childcare Incentive Program is eligible for loan forgiveness. Up to 50% of the principal amount can be forgiven as follows: $2,500 for each childcare position/$5,000 for each infant childcare position that is created in maintained in Duluth, MN for 2 years.



How To Apply

Is my business eligible?

If your business is located within the Duluth city limits and needs financial support to complete a project or expansion, the 1200 Fund has a loan option for you.


How do I apply?

After determining the right loan program for your business needs, fill out a pre-application (available at the bottom of this webpage).  A city of Duluth staff member will contact you within two business days requesting additional eligibility information.

If your business is seeking the General Loan Program, fill out a pre-application and City staff will contact you with the formal application and get you connected with our partner, Northspan Group, to conduct underwriting and, if approved by the Duluth 1200 Fund Board, finalize the loan documents.


Why should I pursue a Duluth 1200 Fund loan?

The 1200 Fund board is comprised of area business leaders, skilled financial experts, business professionals and even past borrowers who believe in the non- profit’s objective to assist business and entrepreneurs.  Loans are provided to fill the financial gap needed to take a project to completion, these programs can help businesses who need that final helping hand to advance their project. Some of the programs offer loan-forgiveness if certain requirements are met.


Customer Testimonials

Mesabi Preschool Academy

Our desire to address the child care shortage across St. Louis County had us yearning to open a location in downtown Duluth to services the needs of working parents who would like the opportunity to be within walking distance of their child(ren). Partnering with the City of Duluth, who also saw the need for child care in the downtown area allowed us to bring that dream to reality! Funding helped alleviate the financial burden in an industry that already has razor thin profit margins. Monies helped purchase furniture/materials, with the balance used toward operating costs during the unprecedented times of COVID

Shelly Vanneste, Mesabi Preschool Academy

Duluth Pottery and Tile

The 1200 fund allowed the Duluth Pottery to grow by providing gap funding to put a roof on my new old building. Now we...our new team...can grow and be a solid part of the Duluth Business and work community!

Karin Kraemer, Duluth Pottery

OMC Smokehouse

The effort that goes into restoring an old building is daunting.It takes more than just finances to start up a business. It takes a team. Partnering with the city has given us the confidence to know we are all in this together. Restoring and rebuilding Lincoln Park's charm is a goal that we can all do better together. Leveraging the costs is critical in keeping the financial well being in line so we can get past the hurdles and create a vibrant tax base for long term success.

Tom Hanson, OMC Smokehouse



Duluth Pottery & Tile Before Reconstruction
Duluth Pottery & Tile After Reconstruction
OMC Smokehaus
OMC Smokehaus Before & After

Contact Us

Contact Info

411 West 1st Street
Duluth, MN 55802

(218) 730-5310

Board Members

  • Laura Mullen (President)
  • Julie Pierce (Vice-President)
  • Stephanie Williams
  • Emily Vikre
  • Fred Lewis
  • Arik Forsman (Council Representative)
  • Noah Schuchman (ex officio board member)

General Inquires