Analyzing Promise Act Grantees

Watching the KSTP story on the Promise Act inspired me to dig into the data to see for myself what is going on. Here is what I found out. But first some context:

• The data analysis is done with ChatGPT so necessary caution on AI hallucination is relevant so please explore for yourself with regular data tools. My sense is that the analysis appears to fit the data observed.
• 78 percent of all small business in Minnesota are nonemployer firms, meaning they can be sole proprietors, LLCs etc. Important to keep this fact in mind.
• The 5 sectors with the largest number of firms in Minnesota are Professional Services, construction, transportation and warehousing, real estate, and retail trade – all having at least 50,000 firms.
• The Promise Act was geography based and around commercial corridors so eligible businesses had to be located there.
• The Promise Act was not community/group specific and so outreach efforts and internal processes would determine broad participation.
• The grantors created a new platform to ensure compliance and eligibility with the legislation.

ChatGPT Analysis of Grantees

Summary

The Promise Grant dataset (928 awards; ~$18.1M total) shows concentration in transportation, retail, food services, and health care. Sole proprietors dominate in number, while corporations, LLCs, and nonprofits receive higher average awards. This could align with greater infrastructure needs of larger entities and the fact that most small businesses in Minnesota have no employees and could be sole proprietors, LLCs etc.

Analysis

1. Regional Patterns

• Twin Cities Metro: LLCs and corporations average ~$18–26K; sole proprietors ~$9–11K.
• Greater MN Regions (Central, Southwest, West Central, etc.): Similar structure; corporations/nonprofits consistently receive ~$24–30K average; sole proprietors lowest tier.

2. Sector (NAICS 2-Digit)

• Transportation: 325 awards | Avg ~$12.6K | $4.09M total (largest volume).
• Health Care: Avg ~$25.3K (high capital/licensure).
• Accommodation/Food: Avg ~$23.9K.
• Retail: Avg ~$17.6K.
• Manufacturing / Construction: Avg ~$24–26K (high equipment intensity).
  Lower averages: Administrative Services (56), Other Services (81).

3. Business Structure Distribution

• Sole Proprietors: ~33% of awards | Avg ~$11K.
• LLC: ~25% | Avg ~$17.9K.
• Corporations: ~13% | Avg ~$25.6K.
• Nonprofits: ~4–5% | Avg ~$25–31K.

Pattern: More formalized entities receive ~2x the average award of sole proprietors.

Higher Average Award Sectors

•  Manufacturing: Avg ≈ $25.8K
• Construction: Avg ≈ $24.4K
• Information: Avg ≈ $24.4K
• Health Care: Avg ≈ $25.3K

Lower Average Award Sectors

• Administrative Services: ≈ $10.3K
• Transportation: ≈ $12.6K
• Other Services: ≈ $13.4K

Analysis

Sectors requiring licensure, equipment, or regulatory compliance (health, manufacturing, construction) receive larger average awards. High-entry informal sectors (transportation, personal services) receive smaller awards but dominate volume.

Compared with Minnesota’s overall small-business industry mix, Promise Grant awards are heavily concentrated in Transportation/Warehousing (NAICS 48) and Accommodation/Food (72), while Professional Services (54) and Construction (23) are underrepresented.

Promise Grant (by award count share) vs MN all small businesses (share):

• Transportation/Warehousing: 35.0% vs 11.7% → ~3.0x overrepresented
• Accommodation/Food: 6.4% vs 2.7% → ~2.3x overrepresented
• Retail: 8.3% vs 8.3% → ~parity
• Other Services: 9.1% vs 9.3% → ~parity
• Health Care: 6.4% vs 7.3% → slightly under

Most underrepresented (index < 0.25):

• 56 Admin/Support/Waste: index 0.08
• 23 Construction: 0.16
• 54 Professional Services: 0.20
• 42 Wholesale: 0.21
• 52 Finance/Insurance: 0.21

Overall Insight

The sectoral distribution of grantees could be the result of the geographical boundaries specified in the legislation

Grantors should provide more feedback why applicants were rejected. For example, 3 businesses I know in Little Africa are not on the grantee list.

The large amount of sole proprietors among the grantees – in context – most businesses in Minnesota are businesses without employees which could be sole proprietors, LLCs etc.

It is difficult to analyze the data across various groups as DEED has not posted that data. I hope there is broad representation as a lot of outreach was done by grantor partners.

Grantors set up a new platform to ensure applicant’s eligibility and documentation – it will be good to get a report on who was rejected and why and what systems could be better used for future initiatives.

We need more information on the distribution of grants in Greater Minnesota – who were the grantees, how many applied, what was the outreach etc.

Grantees need to provide simple reports back to the grantors on how support from the people of Minnesota was used to sustain or grow their businesses. Grantors and partners need to maintain contact with grantees to support them as they grow their businesses, with intentional efforts to move businesses along the path from sole proprietor to LLC or legal structures and capacity such as back-office capacity so we grow healthy businesses.