Small business owners throughout the country struggle with securing enough funding to keep the doors open and operations flowing smoothly. In Ohio, businesses with fewer than 100 employees are no exception to this truth – at some point or another, the often-critical need for an influx of capital is a requirement for a company, regardless of industry or mission.
Businesses need funds for varied reasons, including new equipment and product launches, upgraded technology systems or new hires, and growing inventory or location expansions.
Even though the need for small business financing is universal, where it comes from is less cut-and-dried.
Here is a guide to understanding small business funding and the primary sources where financing comes from within the state to help with whatever cash needs arise in running a company.
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Small Business Loans in Ohio
Small businesses in Ohio may also secure financing through small business loans from various banks. Here are a few options.
Small businesses in Ohio may qualify for a loan with Huntington Bank for help with financing real estate, equipment, or working capital needs. Small business bank loans from Huntington Bank come with variable or fixed interest rates and a range of repayment options to fit nearly any budget. Bank loan applications are submitted in person at a Huntington branch location, and they require a review of credit history as well as business and personal financial statements.
Ohio businesses also have several options for term business loans through GUD Capital. The finance company works with an extensive network of more than 4,000 lenders who specialize in small business financing, offering conventional business term loans up to $5,000,000. Repayment terms, interest rates, and costs for funding a loan vary from lender to lender, as do credit requirements.
Ohio Valley Bank
Small businesses in the state may qualify for a term loan with Ohio Valley Bank. Term loans may be used for commercial equipment, real estate, expansion, or construction, and they range in size depending on the business need. Ohio Valley Bank also offers SBA loans and USDA loans to qualified small businesses. The bank requires at least three years of business financials to qualify, as well as details on collateral used to secure the business loan. Applications are made in-person at a branch location of Ohio Valley Bank.
First Service Federal Credit Union
Small businesses in Ohio may qualify for financing through First Service Federal Credit Union as well. Ohio small business loans made available through the credit union may be used for purchasing equipment, providing working capital, funding business acquisitions, or debt consolidation. There are also SBA loans available through the credit union lender. The total amount of funding, interest rate, and repayment terms vary depending on the financial strength of the business owner and the company itself. Applications for small business loans are submitted in-person at a First Service Federal Credit Union branch.
Small Business Grants in Ohio
Grants can be an advantageous strategy for funding some or all business operations within the state of Ohio. Small business grants, unlike loans and certain investments, do not need to be repaid, but instead, require the business to follow a set of guidelines on how, and often, when the funds will be used. Grants for small businesses in Ohio come in a myriad of forms, but some of the most prominent include the following.
Ohio Brownfield Fund
Businesses in Ohio that are in need of financial assistance in redeveloping a brownfield (a piece of property that may have environmental contaminants or hazardous substances) may qualify for a grant from the state. Up to $500,000 in funding can be provided for environmental assessments to qualified businesses. Applications for new projects are awarded on an ongoing basis, and an intake assessment form may be found and completed online.
Community Reinvestment Area Program
Through this initiative, businesses with real estate property may qualify for a tax incentive that works like a grant. Existing property owners who renovate current properties or construct new buildings in certain parts of the state as part of their business can receive an exemption from property taxes. A business application form can be found online, and it requires companies to provide details about the property used for the grant, business financials, and purpose of the building.
Ohio International Market Access Grant for Exporters (IMAGE)
This grant, supported by the Small Business Administration, is designed to create jobs while increasing exports. IMAGE grants are awarded to small businesses who promote their products or services in international markets, up to $12,500 per year. Businesses must submit an application each year, and only for-profit companies are eligible to apply. Details surrounding additional eligibility requirements, application information, and deadlines may all be found online.
Green Technology Business Grant Program
The city of Cleveland offers the Green Technology Business Grant Program, which is meant to bring new green technology businesses into the area. Grant assistance is available for small companies that create five or more new jobs within the first year of business. Funding may be as high as 0.5% of new payroll for up to five years, along with a $5,000 moving assistance grant. Applications are submitted online for the grant on a rolling basis.
Municipal Small Business Initiative
The Small Business Administration partners with Cuyahoga County with this performance grant. Eligible businesses may receive up to 15% of the required equity in an SBA funded project from city and county funding, which eases the financial burden of performing specific tasks. This grant is meant to increase job creation and advancement opportunities for Ohio residents. Applications are submitted online on an ongoing basis.
This grant initiative is led by a nonprofit organization focused on the development of women and minorities in business, supported by the Small Business Administration. Through Ohio Score, businesses, both established and new, can secure the right assistance with financing based on specific needs of the company. SCORE offices are located throughout Ohio, including in Akron, Newark, Cleveland, and Youngstown, and applications for financing are accepted throughout the year.
Small Business Investors in Ohio
Above and beyond grants and conventional small business loans, companies in Ohio may seek out the financial help of an investor. Angel investors, venture capitalists, and seed investors all exist throughout the state, ready and willing to help the most qualified small businesses. A few Ohio-based investors include the following.
Based in Columbus, Ohio, Drive Capital is a venture capital and seed financing firm focused on Midwest small business. The investor has worked with countless companies and entrepreneurs over the years, including firms in the healthcare industry, technology, analytics, and e-commerce. Drive Capital encourages businesses with innovative ideas to submit a request to meet and pitch through its website.
Another Columbus-based investor is Venture Ohio – a firm dedicated to advancing Ohio entrepreneurship through strategic investment. Venture Ohio provides access to a network of investors from the state and beyond, giving businesses an opportunity to grow with financing assistance. The organization does not have a single industry focus, but instead encourages small enterprises from all verticals to consider inquiring about membership and business connections.
Ohio small businesses in the hospitality industry may find a reliable partner with Rockbridge Capital. The investment firm has worked with some of the most significant brands in hospitality over its 20-year history, and it continues to grow in terms of the amount of investment available and its internal investor team. More information about the venture capitalist firm, along with ways to get in touch regarding investment, can be found online.
Getting Your Business Ready for Financing
Regardless of the type of financing your small business needs, there are specific details you’ll need to have handy before pursuing funding. For grants, conventional bank or SBA loans, or investor funds, every business needs:
- Detailed information on business financials, including cash flow statements, income and balance sheets, and previous year’s profit-and-loss statement
- Business tax returns
- Business plan
- The legal structure of the business
- Personal financial details, including credit history, score, and tax returns in some cases
Not all small business funding requires the same information, but business owners are best-prepared when they have more details rather than too little. Before walking into a financing meeting, always have an organized picture of the business and an explanation as to where and how the financing will be used to better the business overall.
What Kind of Financing Do You Need?
Because business financing comes in a variety of forms, it can be a challenge to understand which type is most appropriate for your specific business needs. Although there are some exceptions to the following rules of thumb, the guidelines below should be a step in the right direction for understanding the type of financing that is most helpful to your business.
First, grants are often best suited for small businesses that are focused on improving the community in which they operate. As you can see above, grant funding is for particular needs in business, and it is only available to companies that are able and willing to meet the requirements of the grant over time. If you don’t fall into the niche category for a specific grant, looking to small business loans or outside investment may be more beneficial.
Small business loans in Ohio have far more flexibility in how the funds may be used within the company. Whether that is for equipment financing, expansion to a new location, or funding working capital needs, small business loans are used at the discretion of you, the business owner.
However, there is not often any direction that comes from the lender in terms of how to manage the funds they receive or where to put the money to best use. Small businesses that have high hopes for their company and want outside direction on operations may do best in the investor realm.
Outside investments from venture capitalists, seed funds, and angel investors often come with a variety of business assistance, above and beyond money alone. However, businesses may give up some flexibility in how the funds are used, as well as a management seat or two, when tapping the shoulder of an outside investor.
Keep each of these factors in mind before selecting the type of small business financing that makes the most sense for your company’s needs.