DEED Loans Help Bring Automation to Small, Minnesota-Based Businesses 

A new automation funding program aims to bring more robots and automated equipment to small, Minnesota-based manufacturing, distribution, technology and warehousing businesses. Created by the Minnesota Department of Employment and Economic Development (DEED), the Automation Loan Participation Program (ALPP) will provide companion loans intended to fill gap financing needs when purchasing machinery, equipment or software with the goal of increasing productivity through automation for businesses with 500 or fewer employees. The DEED loan is intended to help small businesses that, historically, have been less likely to pursue automation and/or are often unable to secure full financing for automation improvements from other lenders. 

The loans must be made in conjunction with private qualified financing in an amount at least equal (1:1) to the DEED loan. Offering as much as $500,000, the loans will have a 1% interest rate with a 5- to 7-year term. Eligible borrowers must be in the manufacturing, distribution, technology or warehousing sectors, be located in Minnesota and have 500 or fewer employees. 

Additionally, the loan may not be used for the same purpose as any federal guaranteed private financing being used for the project. The machinery, equipment or software to be purchased must total less than $20 million. 

For the purposes of the program, automation technology is a process or procedure performed with reduced or minimal human assistance or operation using various control systems for operating machinery or processes in factories or other facilities. Adoption, implementation and use of any of three types of automation in production will be considered eligible for the loan program, including: 

  • Fixed automation: Also known as hard automation, fixed automation refers to an automated production facility in which the sequence of processing operations is fixed by the equipment configuration. This means programmed commands are contained in the machines in the form of cams, gears, wiring and other hardware that is not easily changed over from one product to another. Typically, these systems offer high production rates and are suitable for producing large volumes. 
  • Programmable automation: Programmable automation is most often used for batch production of products. Batch quantities may range from several dozen to several thousand units at a time. For each new batch, the automated equipment is reprogrammed and changed over to accommodate the new product style. There is generally significant changeover time associated with reprogramming between batches. 
  • Flexible automation: In flexible automation, the variety of produced products is usually somewhat limited, so the changeover of equipment can be done quickly and automatically and is performed at a computer terminal. 

Why Automate? 

Many smaller, Minnesota-based companies do not embrace current automation technologies due to the inability to receive adequate funding for projects. However, with the tight labor market in the state, it is becoming harder for these small businesses to keep up with their competition. The DEED loan encourages these businesses to pursue automation to help fill that void and allow smaller manufacturers, warehouses and distributors an opportunity to increase productivity, quality and safety, by: 

Increasing productivity Improving qualityEnhancing safety
Automation of tasks or processes improves efficiency and production rates by boosting assembly time, reducing bottlenecks and allowing more output in the same amount of time when compared to doing the same tasks manually. Automation can also run continuously, so the process never needs to be shutdown.Quality is also improved because automation reduces human involvement and human error, which helps increase product uniformity and permits repeatability.Since automated machinery can be placed in hazardous or treacherous areas, automation can help improve safety of the facility and personnel. Replacing human operators with automation in operations that involve heavy lifting or repetitive motion tasks can also help reduce workplace injuries.

Automation allows small businesses to keep up with the competition and continue to grow current production because it accomplishes repetitive, manual tasks and makes current processes more efficient. If a business struggles from lack of time or resources, automation can help solve those issues. 

Automation is available in a variety of systems and technologies and is customizable, making it possible to find an option for just about any application for even the smallest of businesses. In addition, there are many types of automation such as electrical, pneumatic and hydraulic, making automation adaptable and suitable for all businesses and environments. 

The Key to Finding an Automated Solution 

An experienced and reliable supplier is the key to helping businesses select and apply the automated equipment that best suits the application and situation. The assistance of a good supplier combined with a DEED loan, which offers funding for smaller Minnesota-based businesses, can help the “little guys” keep up with the competition. 

When it comes to choosing the right automation equipment, there’s a lot to consider. JHFOSTER’s  experts can help you understand your options and select the automation products that will help multiply production and grow your business, even in a tight labor market. Contact us to speak to an automation specialist. More information on the DEED ALPP loan can be found here.