Lawmakers consider grant for lender serving underserved entrepreneurs

Should a nonprofit lender get state funding to provide risk-mitigating capital for commercial development activities in underserved communities and to entrepreneurs from disadvantaged groups statewide?

Sponsored by Rep. Cedrick Frazier (DFL–New Hope), HF2581 would provide $1 million from the General Fund in Fiscal Year 2026 for a grant to Fortis Capital, a Minneapolis-based lender.

The House Workforce, Labor, and Economic Development Finance and Policy Committee laid the bill over Tuesday for possible inclusion in a larger budget measure.

Rep. Cedrick Frazier

“Starting and sustaining a business requires access to capital, and our traditional lending system was not built with everyone in mind,” Frazier said, citing lenders’ requirements such as real estate collateral, strong credit scores, or extensive financial documentation that can create barriers based on geography, race or gender.

When a borrower doesn’t have the personal assets required by traditional lenders, Fortis Capital can help bridge the gap, said CEO Brian Smith. “Fortis Capital doesn’t replace banks but strengthens the pipeline to them.”

Among the organization’s products are a participating loan program, line-of-credit guarantees, forgivable interest-only loans up to $10,000, and direct loans.

Smith said many organizations that receive state funding to support entrepreneurs are closely tied to bank financing and lack the flexibility Fortis Capital has to take on riskier borrowers.

Rep. Dave Pinto (DFL–St. Paul) acknowledged the value of a lender willing to take greater risks. He also noted lawmakers have been trying to move away from legislation naming specific grant recipients and toward competitive grant programs instead.