Legislative ‘lifeline’ has so far distributed $ 2.6 million in forgivable loans to Northwest Angle businesses


When the Canada-U.S. Border was closed during the COVID-19 pandemic, the few businesses in the northwest corner of Minnesota were crushed.

The slice of land – the northernmost point in Minnesota and the lower 48 – can only be reached for most of the year by crossing Canada, taking a rare flight, or cruising the enormous Lac des Wood, which meant that the area was all but blocked from having visitors.

The United States still prohibits Canadians from entering the United States for overland tourism, but vaccinated American citizens can now travel through Canada, which means the situation has improved for the centers of resort and other businesses in the region.

But earlier this year, before some restrictions were lifted, lawmakers in Minnesota crafted a $ 5 million forgivable loan program for the Northwest Angle. Lawmakers say the money will be a lifeline for businesses in the tourism-starved region, which includes ten seaside resorts and about 150 inhabitants, although there have been few details publicly shared on how the funds have been spent so far.

How the loan program was born

Non-essential travel between the United States and Canada was halted in March 2020, as part of an effort to stop the spread of COVID-19, although residents of the Northwest Corner may enter Canada for medical help or basic needs like groceries.

But it was almost impossible for tourists to reach the isolated area. Thefts are rare, and crossing Lake of the Woods by boat can be dangerous and difficult. Some have reached the area this year by a ice road in winter, but a resort owner told MinnPost in May that its revenue fell 80 to 85 percent in the summer of 2020.

Stimulus bills passed by Congress under Presidents Donald Trump and Joe Biden included money for businesses economically affected by the pandemic. This year, the Minnesota Legislature also approved $ 150 million in “Main Street” grants and loans for businesses split between two programs aimed at relieving the economy in the aftermath of the pandemic (and in the aftermath of the pandemic. riots in Minneapolis after police killed George Floyd).

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Despite this influx of money, some lawmakers wanted to make sure businesses in the Northwest Corner got help and created a separate loan program just for the area. State Representative Matt Grossell, R-Clearbrook, and State Senator Paul Utke, R-Park Rapids, proposed $ 5 million for “remote leisure businesses” in the northwest corner.

The legislation is however blocked. It did not have a hearing in the DFL majority house or the Republican-led Senate, and the provisions were not included in either chamber’s budget plans. A $ 2 million grant program for Northwest Angle was included in a House DFL tax plan. But when legislative leaders reached agreement on a final set of economic development laws in what is known as an “omnibus” bill, they did not include Northwest’s $ 5 million loan program. Angle nor subsidy. At this stage in the legislative process, bills are rarely amended.

Shortly before a House vote on the Jobs Bill, Grossell said he approached State Representative Mohamud Noor – a DFLer from Minneapolis who chairs the finance and policy committee Labor and Business Development Council – to ask if the $ 5 million loan program could be added at the last minute to the omnibus bill.

Grossell said Noor gave him a short list of issues to work out with the Republican-led Senate. Once Grossel removed the hurdles, leading lawmakers agreed to change the agenda on the House floor bill. “I said these people were cut off through no fault of their own by the border closure,” Grossell said.

At the time on the House floor, Noor said the legislation was an example of lawmakers from different parties and disparate geographies working together. In an interview last week, he said lawmakers “felt we had to do something” because the “lifeline” of these companies was cut off during the border closures.

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Noor said it was not unusual for lawmakers to give specific help to certain areas or entities. There was also money for the Destination Medical Center in Rochester in the Omnibus Jobs Bill, as well as a loan for a Duluth stationery. But Noor said the Northwest Angle is unique in that people generally have to cross Canada to visit it, and said federal members of Congress from Minnesota have also tried to help people there.

$ 2.6 million distributed to date

US citizens are now allowed to cross the Canadian border in most cases, although there are some barriers to entry. Travelers must be vaccinated and test negative for COVID-19 within 72 hours. Grossell said the requirement for a negative test can be a burden and sometimes an expense for tourists.

On Friday, six US senators, including Amy Klobuchar and Tina Smith from Minnesota, sent a letter to the US government urging the Centers for Disease Control and Prevention to allow Canadians to enter the United States by land for tourism purposes. “The extension of the ban on land border crossings has significant impacts on states and communities along the Canadian border,” the letter said. “Before the pandemic, Canadians regularly crossed the border to shop at small businesses, visit ski resorts and recreation areas, and see friends and family.”

While the Biden administration plans to allow fully vaccinated people to enter the United States by air after testing negative for COVID-19, ground entry is still limited to essential travel, impacting the northwest corner, according to a spokeswoman for Klobuchar.

Northwest Angle’s loan program is intended to help the region cope with the fallout from the pandemic and the border situation. It is open to any “remote recreational business” in the region which lost more than 30% of its revenue between March 2020 and 2021 and was affected by the border closure. A loan can represent up to 75% of a company’s gross annual income for fiscal 2020, with a maximum of $ 500,000. The loan is canceled if the business is still in operation one year after the loan was granted.

The loan program is also intended to prevent businesses from being reimbursed twice for losses. Any business that has secured a grant from the state’s Main Street COVID-19 Relief Grants Program, which helps businesses affected by the pandemic, is not eligible for the forgivable loan, for example. And if a business gets another forgivable loan from the federal government, such as a $ 2.2 trillion CARES Paycheck Protection Program loan, the state will subtract that amount from what is considered as forgivable under the Northwest Angle program.

State law required Lake of the Woods County to establish the loan program, but the county contracted with the Headwaters Regional Development Commission to manage it. The Headwaters Commission is chaired by a 25-member council made up largely of elected officials from the region.

Sarah Linda, a business loan specialist with the Headwaters commission, said $ 2.6 million has been distributed so far in 25 loans to resorts and other businesses, such as guidebooks. fishing. One borrower qualified for the maximum loan of $ 500,000, Linda said, while another qualified for a small loan of $ 9,554. A small handful of businesses qualified for loans are still working on applications, Linda said.

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Although the loan program is publicly funded, the Headwaters commission declined to say which companies received loans and for what amount. Linda did not cite any state laws to justify withholding the information, but said HRDC contacted Lake of the Woods County and the Department of Employment and Economic Development for advice. on disclosure.

“We usually don’t share information about borrowers and the amount they received; it’s something that I adhere to in all the portfolios I manage, ”Linda said in an email. “We are an intermediary, contracted to process loan requests.

DEED spokeswoman Jen Gates said the agency did not have the data and would not comment on whether the county or HRDC should release the information. State law requires a report to the Legislature on the program by January 15, 2023.

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