Did you know that Ohio is ranked 3rd in the nation for best access to business lending? This is great news if you are thinking about starting or have an existing small business in Ohio and need adequate funding to cover various costs.
As you outline your financial plans, it’s important to research the different types of small business loan programs so that you understand their nuances and if you meet their eligibility requirements. We’ve highlighted the top 4 business loan programs in Ohio so you can better understand your options and choose the right program for your business’s needs.
Top 4 Small Business Loan Programs
- SBA 504 Loan Program
The U.S. Small Business Administration (SBA) partners with lenders and banks to provide loans to small businesses. The SBA 504 loan program is just one of many options, and it is offered exclusively through Certified Development Companies (CDCs) like Growth Capital Corp.
SBA 504 can be used to finance long-term fixed assets, such as furniture, equipment, commercial real estate, machinery, construction, and building improvements. It provides small businesses with fixed-rate financing from $125,000 up to $10 million.
The 504 loan program is ideal for existing for-profit businesses that have a net worth less than $15 million and an average net profit that doesn’t exceed $5 million (after taxes for two consecutive years).
The interest rate is fully amortized for the length of the loan. The term for real estate loans is 20 years, and the term for equipment loans is 10 years.
- SBA 7a Loan
If you recently started a business or wish to purchase an existing company, the SBA 7a loan may be the right program for you.
The 7a loan program includes financial assistance to for-profit small businesses that already have invested personal assets in the company and have demonstrated a need for a loan. The 7a loan can be used for working capital, refinancing current business debt, and purchasing inventory.
Unlike the SBA 504 loan program, the maximum loan amount that businesses can receive is $5 million. Typically, 7a loans start at approximately $30,000.
The 7a loans are generally variable-rate and have terms up to 25 years. However, the loan length differs for equipment purchases and working capital (10 years).
Learn more about the differences between the SBA 504 and 7a loan programs here.
- Ohio Regional 166
The Ohio Regional 166 loan program offers a lower down payment, lower fixed interest rates, and longer-term rates to small businesses in Ohio that meet specific requirements. The 166 loan can be used for fixed asset financing, including land and building acquisition, the purchase of machinery and equipment, building improvements, renovations, and new construction.
The eligibility requirements for the 166 loan program include Ohio small businesses that operate as for-profits in the manufacturing, distribution, wholesale, commerce, and (in some cases) services industries.
The Ohio Regional 166 loan term is generally up to 20 years for real estate and 10 years for machinery and equipment.
- Community Advantage Loan
Regardless of what stage your business is in, the Community Advantage Loan may be able to assist you with working capital. The purpose of the program is to increase access to credit for small businesses, especially those that have not been able to secure traditional bank financing.
This loan can be used for buying new and existing commercial buildings or equipment, augmenting working capital, consolidating debt, hiring employees, covering payroll, making lease payments, expanding your business, and more.
The maximum Community Advantage Loan amount is $250,000. For-profit small businesses in the manufacturing, distribution, wholesale, commerce, and service industries are eligible for the loan as long as they have consistent and large enough cash flows.
Work with Growth Capital to Get a Small Business Loan
Learning about the most common small business loan programs in Ohio is the first step to making your business dream a reality. At Growth Capital, we will work with you to find the best financing option for your small business that aligns with your business goals. Contact us today to get started.