Ohio Direct Financial Incentives 2011
Ohio's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include industrial development bonds, direct loans, and research assistance.
Area Development Research Desk (March 2011)
Industrial development bonds:
The Ohio Enterprise Bond Fund is designed to provide long-term, fixed-rate, one-stop financing for qualifying industrial and commercial businesses throughout the state. The bonds may be either tax exempt or taxable. Funds can be used for land, building, machinery and equipment. Loan amounts range from $1 million to $10 million for up to 90 percent of the total project amount. A participating lender is not required. Real estate loans can range up to 20 years, while equipment loans are limited to 120 percent of the average life of the project. All borrowers will receive a market interest rate, fixed for the life of the loan. Since the Enterprise Bond Fund has received an investment grade rating of A- from Standard & Poor's, all borrowers utilizing this fund will receive this same rating for the issuance of their debt. Rates are finalized at the time bonds are issued.
Counties and municipalities also issue tax-exempt industrial development bonds to provide private manufacturing companies with lower-cost financing for locating or expanding in the state.
Direct state loans:
The 166 Direct Loan Program provides loans for 30 percent of eligible project costs up to $1 million at low interest rates to businesses that are locating or expanding in Ohio. Loans can be used to purchase land and buildings, undertake new construction or renovation, and acquire machinery and equipment. At least one job must be created for every $15,000 of state funds.
The SBA 504 Loan Program provides funds for up to 40 percent of the total fixed asset costs of a project for a term of up to 20 years on real estate and 10 years on equipment. The minimum loan is $40,000. The maximum is $750,000 except in rural distressed areas, where it is $1 million. Borrowers can be industrial or commercial users (developers are not eligible) and must have a net worth of less than $2 million and an after-tax profit of less than $2 million. At least one job must be created for every $35,000 of 504 money. Interest rates are fixed at less than prime.
The Office of Minority Financial Incentives helps minority businesses establish and expand their enterprises through state loans and bonds. The maximum loan is $200,000. The borrower finances 60 percent of the project. Loans can be used for land, building, equipment and machinery.
In addition, the Office of Minority Financial Incentives has a Mini-Loan Guarantee Program for small businesses with 25 or fewer employees. Under this program, the maximum bank loan cannot exceed $100,000, and the maximum state guarantee cannot exceed 45 percent of the bank loan, or up to $45,000. The program, which can only be used for fixed assets, has an interest rate on the guaranteed portion of 5.5 percent, while the unguaranteed portion will be at the bank's prevailing interest rate. The state will guarantee 45 percent of the bank's loan in the event of a default.
The Ohio Small Cities Community Development Block Grant Economic Development Program can provide a non-entitlement county or city with $500,000 for a direct loan or a $400,000 grant for offsite infrastructure improvements. Project funding may be for expansions or startups of either the industrial, manufacturing, commercial, retail or service sectors. At least 51 percent of the jobs created and/or retained must be available to persons from households of low and moderate income. The interest rate and the term of the loan are negotiated between the company and the community and are based on a financial analysis of the business, the business's and the project's need for assistance, and the ability to repay.
The Small Business Innovation Research (SBIR) program is designed to help Ohio's small, research-oriented businesses use the federal SBIR program to research, develop, and commercialize new products, technologies and processes in selected areas. The federal program requires 10 federal agencies to allocate a small percentage of their research and development budgets to projects involving small business.
Companies must be American-owned, for-profit businesses employing 500 or fewer persons at the time the terms of the grant or contract are finalized.
Funds are provided in two stages. Phase I awards of up to $100,000 are available for feasibility research. Two-year prototype development awards of no more than $750,000 are available to companies whose Phase I results are viewed favorably by the funding agency.
Money provided through SBIR may be used to cover costs directly related to the proposed research project. A maximum of one-third of the project may be performed by subcontractors. Indirect costs may be included.
Ohio's SBIR program offers assistance in notification of solicitations from federal agencies, topic selection, proposal review, and winner's support.
Customized industrial training:
The Ohio Workforce Guarantee Program (OWGP) is designed to provide financial assistance and resources for customized training involving employees of new and expanding Ohio businesses on a reimbursement basis. OWGP links Ohio's postsecondary public educational system (vocational and technical schools, and colleges and universities) to the needs of industry. Funding is provided on a reimbursement basis for a portion of the training expenses incurred, including (but not limited to) instructor costs, educational materials, curriculum development, software rental, and compliance with Equal Opportunity Employer regulations.
Ohio State Contact:
Ohio Department of Development
77 S. High Street
P. O. Box 1001
Columbus, OH 43216-1001
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.