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Federal Financing Programs

SBA 504 REFINANCE LOANS
The original debt(s) to be refinanced must have been for eligible 504 purposes. SBA will require the documentation for the original use of proceeds as well as the current obligation being refinanced. Company must have been in operation for at least 2 years. Debt(s) must have been outstanding for at least 2 years. There is no refinancing of existing SBA (including 504 first mortgage) or USDA loans. The borrower must have been current (no payment deferrals or past dues of more than 30 days based upon a submitted bank transcript) on the note(s) for the past 12 months. The project must satisfy all SBA eligibility requirements including the minimum occupancy level and job creation/retention criteria (1 job for every $65,000 borrowed unless the project meets a Community Development/Public Policy Goal).

Program Eligibility Guidelines

  • Program is for debt refinancing only. No expansion or purchase of real estate or other fixed assets (Expansion with Refinance eligible under the regular 504 program).
  • The program offers the ability to cash out. Excess equity (up to 90% LTV) can be used to pay down/pay off a line of credit, fund building improvements or purchase machinery and equipment, or pay for eligible business expenses projected over the next 18 months.
  • Maximum LTV is 90%. Additional collateral (real estate and/or equipment) can be pledged to supplement shortfall on project collateral.
  • Borrower's contribution may be satisfied by its equity in the collateral being offered to SBA. If there is a deficiency, it can be addressed by the current lender forgiving a portion of the debt, the borrower contributing cash, or a subordinated note from the current lender.
  • The 504 loan must be funded within 6 months of SBA approval.
  • Refinance loans are priced 17 basis points higher than regular 504 loans.
  • SBA 504 loan cannot be greater than the first mortgage loan. There must be at least 10% equity in the collateral.
  • In the case of same institution debt, a complete transcript of the loan account must be provided.
  • Refinance loans must have SBA approval by September 27, 2012.

504 Loan Eligibility & Process
The U.S. Small Business Association's 504 Loan Program provides funding for up to 40% of the total cost of an eligible project for longer loan terms at fixed, below market interest rates with lower down payment requirements. OSDC offers this loan program throughout Ohio.

OSDC partners with a participating lender to provide the most attractive financing package. The lender holds a first mortgage and/or lien filing and OSDC/SBA provides permanent, subordinate financing.

Eligible Projects Include:

  • land and/or building purchases
  • new building construction or rehabilitation
  • machinery & equipment purchases
  • long-term leasehold improvements
  • purchase of existing business' fixed assets

Business Requirements Include:

  • for-profit with net worth less than $15 million
  • net earnings less than $5 million/year on average over last two years
  • owner-occupied commercial real estate
  • new construction must occupy 60%/premises with potential of reaching 80%
  • existing buildings must occupy 51%/premises
  • job creation/retention requirements apply or other SBA objective, such as rural development or expansion of exports

Available Funding:
Maximum 40% of Project Cost up to $5 million; May be eligible for up to 5.5 million if project is a Small Manufacturer or for Renewable Energy Production. Equity injection from 10% to 20% of the total project cost is required. Minimum collateral requirements are 2nd mortgage or lien position on project assets and personal guarantees.

State of Ohio Financing Programs

OHIO ENTERPRISE BOND FUND: Through this bond fund, which is rated AA- by Standard and Poors, the Ohio Department of Development issues bonds, the proceeds of which are loaned to businesses for eligible projects. Allowable costs include acquisition of machinery and equipment, building or land acquisition, and building construction. The Ohio Enterprise Bond Fund can finance up to 90% of eligible project costs or $10 million (the lesser thereof), with terms ranging up to 20 years.

166 DIRECT LOAN: A loan administered by the Office of Financial Incentives for up to 30% of a project's costs or $1 million (the lesser thereof). The remainder of the financing must be through a combination of private financing and at least 10% owner equity. Allowable costs include the acquisition of machinery and equipment, building or land acquisition, and building construction. The interest rate is not to exceed 2/3 of the prime rate and terms range from 7-10 years for the acquisition of machinery and equipment and 10-15 years for real estate.

INNOVATION OHIO LOAN FUND PROGRAM (IOF): The IOF program can finance up to 75% of a project's qualifying costs through loans in the range of $500,000 to $3 million. The program provides financial resources for product commercialization for leading technology companies. While loan terms will be individually negotiated, interest rates will be prime plus 2% and the loan will be in the range of 4-7 years. Allowable costs include the acquisition, construction, renovation, or improvement of facilities, and the acquisition and installation of equipment for innovative projects that create new products and services.

RESEARCH AND DEVELOPMENT INVESTMENT LOAN: A loan administered by the Ohio Department of Development's Office of Financial Incentives for up to 50% of a project's associated R&D costs. Eligible projects must include job creation, and funds can be used for costs such as acquisition of machinery and equipment, leasehold improvements, and building construction. The interest is not to exceed ½ of the prime rate, and the term of the loan is up to 10 years for machinery and equipment and 15 years for real estate. The Research and Development Loan also includes an annual non-refundable tax credit to be taken against a company's Commercial Activities Tax liability equal to the amount of the principle and interest paid on the loan in that year. The amount of tax credit cannot exceed $150,000 per year.

166 REGIONAL LOAN - STATE OF OHIO - ADMINISTERED REGIONALLY AND LOCALLY: The Ohio 166 Regional Loan Program is a State-funded loan pool that can finance up to 40% of the total cost of a business capital investment project at fixed, below market interest rates with a lower down payment. OSDC offers this loan program to businesses(except retail) in ALL Ohio counties. OSDC partners with a participating lender to provide an appropriate financing solution. The 166 program prefers a shared collateral position with the participating lender.

Eligible Projects Include:

  • land and/or building purchases
  • machinery & equipment purchases
  • building construction and/or renovations
  • long-term leasehold improvements
  • purchase of existing business' fixed assets

Business Requirements Include:

  • primarily manufacturing, research and development and distribution businesses; retail businesses are ineligible
  • owner-occupied commercial real estate (75% new construction; 51% existing building)
  • typically must be a for-profit business
  • Job creation/retention requirements apply ($50,000/job)

Loan amount available is 40% of total project cost up to a maximum of $500,000. Participation of up to 75% of total project cost may be considered on an exceptional basis. Equity injection from 10% to 20% of the total project cost is required. Minimum collateral requirements: OSDC/Ohio Department of Development prefers a shared mortgage and/or lien position established via an intercreditor agreement between participating lender, OSDC, and borrower. A second lien may be considered on a case by case basis with a 1% additional loan fee. Personal guarantees of owners greater than 20% are generally required.

State Grant Programs

RAPID OUTREACH GRANT: Grant funds for project costs including the acquisition of machinery and equipment, land or building acquisition, leasehold improvements, or building construction.

OHIO RESEARCH COMMERCIALIZATION GRANT PROGRAM: The Ohio Research Commercialization Grant Program strives to improve the ability of small technology companies to assess and realize the commercial potential of research projects, and to promote the competitiveness of these companies through the augmentation of federal research and development funding. The Ohio Research Commercialization Grant Program is a primary component of Ohio technology company assistance.

City of Troy Financing Program

TROY SMALL BUSINESS DEVELOPMENT (SBD) LOAN: As the newest and one of three loan programs, the SBD loan program was designed to assist small growing businesses. Companies that are expanding are often in need of new capital for equipment, payroll, inventory or even building improvements. The SBD loan program offers low interest loans with dollar amounts from $2,000 and up to $50,000. SBD program guidelines may be obtained at 100 S. Market Street or on the City of Troy's website www.troyohio.gov. Please contact the Development Department at 339-9601 for more information.

  • Create at least one new job
  • Acknowledgement of existing debtholder(s) regarding SBD loan application
  • Maximum loan amount is $50,000
  • Minimum loan amount is $2,000
  • Minimum of 12 months of business financials
  • $100.00 non-refundable application fee
  • 1.5% Closing Fee
  • Rate: 3.0%
  • Terms: Normally 1-5 years, matching the life of the asset
  • Typical Structure: 90% - Troy SBD Program | 10% - Owner Equity (new cash)

For more information, pdf Click Here.

THE TROY ECONOMIC DEVELOPMENT REVOLVING LOAN FUND (EDRLF): The Troy Economic Development Revolving Loan Fund is a city administered program leveraging federal dollars to provide "gap financing" to businesses that have a primary lender. The Troy ED RLF strengthens cash flow and capacity position for the business by requiring less equity and providing a lower interest rate. In addition, the program is attractive for banks as the city helps guarantee the loan by taking a subordinate position.

  • Create one new job for every $25,000 borrowed
  • At least 51% of new jobs shall be from low-to-moderate income households
  • Federal/State financing and environmental requirements
  • 50% maximum project financing
  • $500.00 non-refundable application fee
  • 1.5% Closing Fee
  • Rate: 3% - 6%
  • Terms: Normally 5 years on equipment, matching the life of the asset & 15 years on real estate

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TROY DOWNTOWN BUILDING REPAIR PROGRAM: Downtown Business Building Repair Loan Program is administered by the City of Troy Development Department to assist in revitalizing the downtown. Low interest loans are available to building owners and businesses for building improvements which typically include exterior facades and HVAC, plumbing, and electrical upgrades. The program will provide financing up to 90% of a project.

For more information, pdfClick Here.