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Oregon is a great place to do business. It offers plenty of small business financing options, business-friendly tax policies, and incentives for small business owners, such as the Oregon Investment Advantage.
This program encourages both small and medium businesses to either start or relocate to certain counties in the state. If you have as few as five full-time employees and do business in one of these counties, your business can deduct or potentially even eliminate its state business income tax liability for up to 8 years.
Another great incentive is the Oregon New Market Tax Credit (NMTC), which allows Oregon business owners to obtain below market-rate investment options in order to revitalize low-income communities. If your business qualifies for an NMTC, you can receive a 39% tax credit of the total qualified investment spread over seven years. These two programs show that Oregon is dedicated to attracting—and retaining—small businesses in the state.
In addition, Oregon has been named one of the top 10 states in the country for business taxes. According to the Tax Foundation, Oregon achieved the number 10 spot (which it has held since 2014) for two reasons. First, it does not have sales tax on most items. Second, it allows corporate net operating losses to be carried forward for up to 15 years without a cap. Both of these policies allow businesses to decrease their tax liability and increase their profitability.
There are lots of great reasons to either start a new business or expand an existing business in Oregon. But obtaining small business financing in Oregon can be tricky, particularly if you are just starting out as a new business owner. Fortunately, there are options for small business owners, including small business loans, small business grants, and investors.
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Small Business Loans in Oregon
For some business owners, particularly those with a more established company, a Oregon small business loans can be a great way to obtain financing. There are a number of lenders in Oregon who offer loans to small businesses.
Here are some Oregon small business loan options:
- Oregon Community Credit Union
- Columbia Bank
- On Point Community Credit Union
- Oregon Pacific Bank
- Rogue Credit Union
- Oregon Water Development Loan Program
- Ascent Funding
Oregon Community Credit Union
Founded in 1956, Oregon Community Credit Union (OCCU) offers both personal and business banking options. On the commercial side, OCCU has two options for loans: business lines of credit and vehicle loans.
Business lines of credit are available at competitive rates, with a range of payment options. This includes the ability to make interest-only payments on a line of credit. Business vehicle loans are offered for both new and used cars and trucks. To apply, small business owners can contact OCCU directly. Eligibility for these loans is based on a number of factors, such as the length of time that a business has been in operation, the credit history of the business and owner(s), the business’ income stream, and projected profits. Business owners can apply for these loans by contacting OCCU directly.
Columbia Bank started in 1993 as a community bank. Headquartered in Tacoma, it has grown to include more than 150 branches in Washington, Oregon, and Idaho. Through a partnership with the Small Business Administration (SBA), Columbia Bank offers loans as a preferred lending provider (PLP).
Columbia Bank offers two separate SBA loan programs. The SBA 7(a) Loan Guaranty Program allows small business owners to finance almost anything in amounts ranging from a few thousand dollars up to $5,000,000. The SBA 504 Loan Program is a fixed asset financing program, which is primarily used to finance either the purchase or construction of owner-occupied real estate. For SBA 7(a) loans, the SBA guarantees between 50% and 85% of the loan amount.
For SBA 504 loans, business owners will typically be required to invest a down payment of 10%. Columbia Bank’s SBA loans have more flexible terms compared to conventional loans. For real estate loans, the loan term is 25 years. For equipment loans, the term is 10 years. For working capital loans, the term is 7 to 10 years.
Applications for SBA loans through Columbia Bank should be completed in person by working directly with a loan officer at a local branch. There are specific criteria that must be met for each type of SBA loan, such as the size of the business and the number of jobs that must be created. The approval process typically takes less than three days. However, certain types of transactions, such as commercial real estate transactions and start-up requests, take longer and may require as many as 60 days to complete.
On Point Community Credit Union
On Point Community Credit Union (OPCCU) was founded in 1932. Originally named Portland Teachers Credit Union, OPCCU has grown and changed over the years to encompass a broader mission of promoting the financial well-being of the greater Oregon community. It currently has more than 347,000 members. For small businesses, it offers four financing options: business operating lines of credit, business term loans, business real estate loans, and business auto loans.
For small businesses, OPCCU’s business operating lines of credit have variable interest rates that range from 8.75% to 10.75%. Its business term loans are available in lengths of up to 60 months, with fixed rates of between 10% to 16%. OPCCU business real estate loans have competitive rates and terms based on the type of property purchased and whether the interest rate is variable or fixed. Business auto loans for new or used vehicles can be taken out for terms of 36 to 84 months. Fixed interest rates range from 3.24% to 7.79% for new automobiles and 3.39% to 7.49% for used automobiles. Small business owners may also obtain loans for business specialty vehicles, with terms of up to 60 months and fixed interest rates between 8.50% and 9.50%.
OPCCU offers flexible options for its loans, including the potential for either fixed or variable interest rate financing for term and real estate loans. All loans may be secured by collateral, and the amount of the loan can be customized. Applications are accepted at OPCCU branches. Small business owners should bring financial documents from the past two years, including tax returns and financial statements, for themselves and for the business, when applying for a loan with OPCCU.
Oregon Pacific Bank
Oregon Pacific Bank started in 1979 in Florence, Oregon. It has grown to include a number of branches across the state, providing personal and business services, as well as wealth management and trusts. Oregon Pacific Bank offers a number of loans to small business owners. These include commercial real estate loans, equipment financing, revolving lines of credit, term loans, construction loans, government guaranteed loans, Business Oregon loans, USDA loans, and Small Business Administration loans.
Three types of loans are of particular interest, as they are more unique to Oregon Pacific Bank. The first, the Business Oregon loan, is offered through the Oregon Credit Enhancement Fund. This loan is directly funded by Oregon Pacific Bank and can be used to purchase fixed assets or provide working capital. There is a maximum insurance of $2,000,000 on term loans and $1,500,000 on lines of credit.
The second type of Business Oregon loan is offered through the Oregon Business Development Fund. To be eligible, business owners must either create or retain jobs in manufacturing, processing, or distributing. It can be used to finance land, buildings, equipment, and as permanent working capital. The loan, which will come directly from Business Oregon and Oregon Pacific Bank, cannot exceed $1,000,000 from Business Oregon. The bank loan amount is unlimited.
Third, USDA Business & Industry Guaranteed Loan Program loans are directly funded by Oregon Pacific Bank. These loans are available in amounts up to $10,000,000 and can be used to acquire a business when it will retain or increase jobs; develop, modernize, or repair an operating facility; or purchase real estate, equipment, or inventory. These loans can only be used by small businesses in rural communities with fewer than 50,000 people.
Rogue Credit Union
Headquartered in Medford, Oregon, Rogue Credit Union (RCU) was founded in 1956 by 10 Oregon teachers. It primarily serves Southwest Oregon, offering personal and business finance services. RCU offers four types of business loans: lines of credit, vehicle loans, equipment loans, and commercial real estate loans.
Revolving lines of credit for businesses are available in amounts starting at $50,000. RCU approves lines of credit on an annual basis and does not charge cash advance fees. For small businesses that require automobiles, including specialty vehicles and heavy equipment, RCU’s vehicle and equipment loans offer longer repayment terms than other types of loans. Applicable fees can be financed directly into loans. Finally, commercial real estate loans are available for the purchase, renovation, or construction of business real estate. They are available with a range of terms based on a business’ credit history and to suit the needs of the small business.
Applicants should apply for business loans directly with RCU.
Oregon Water Development Loan Program
Oregon’s Water Development Loan Program provides low-cost, long-term fixed rate financing incentives to achieve the state’s water management goals. As part of the program, the state of Oregon may grant loans to individuals and organizations, including small businesses, who meet the program’s criteria. The funding can be used for drainage, irrigation, community water supply for communities of under 30,000 people, fish protection, watershed enhancement, and multipurpose projects.
A representative from the program works with applicants to assist them with the loan process. Before an application has been submitted, a loan officer will conduct a pre-application conference to review the program and answer any questions. Borrowers are responsible for all costs to operate the program, including a $100 application fee and a loan processing fee of $1,000, or 1% of the loan request, up to $10,000.
Ascent Funding is a nonprofit organization that was founded to address the financial discrimination facing African-American business owners in certain neighborhoods of Portland. Over time, Ascent’s mission has evolved to a desire to support other minority- and women-owned businesses as well as low income communities in the Portland area.
Ascent Funding’s term loans and lines of credit are available in amounts ranging from $20,000 to $250,000. Term loans are available in lengths of one to five years with fixed interest rates of 8.5% to 9.5%. There is a 2% origination fee on term loans, and the loans must be secured with collateral. Ascent Funding’s lines of credit are available for one-year periods but are renewable each year. The fixed interest rate for lines of credit ranges from 9.5% to 10.5%. Lines of credit have a 3% origination fee and must also be secured.
To qualify for funding through Ascent, a business must be generating revenue for at least 12 months and must have either been or is likely to be turned down by a bank. It must also be a target business that is either minority-owned (50% or greater), woman-owned (50% or greater), or located in low- to moderate-income areas or in an otherwise disadvantaged area. Finally, a business must be located in the four-county Portland metro region including Multnomah County, Clackamas County, Washington County, and Clark County (Washington).
Applying starts with a conversation, either over the phone or in person. Next, a small business must complete an application, submit financial documentation, and pay a $100 refundable application fee. Ascent Funding will then review the application. If the loan is granted, the funds will be disbursed.
Small Business Grants in Oregon
For some, small business grants in Oregon may be available through the University of Oregon. The RAIN @ UO program connects business leaders with student innovators and entrepreneurs. RAIN (Regional Accelerator and Innovation Network) not only provides resources such as seminars and mentorship for student entrepreneurs, but it also offers the possibility of grant money. The RAINMaker Seed Grant and the Spark Grant both offer the opportunity for student entrepreneurs to get a head start on their business plan with funding.
The RAINMaker Seed Grant is a $5,000 award that can be used for any number of expenses, including paying for prototype designs, funding infrastructure, or conducting other activities to bring an idea to fruition. The Spark Grant is a $500 award that allows students to further study the feasibility of a particular venture so that they can make an informed decision about the project.
Small Business Investors in Oregon
Angel investors are well-off individuals or collections of individuals who provide start-up capital to entrepreneurs, typically in exchange for part ownership of the business. In addition, angel investors usually offer invaluable business advice to help get businesses off the ground.
Here are some small business investors in Oregon:
Oregon Angel Fund
Oregon Angel Fund is a venture capital fund that works to help grow local businesses using their subject matter expertise. The group consists of 180 investors from a diverse array of industries. They offer pre-funding assistance to help entrepreneurs get ready for funding eligibility, as well as ongoing support if they choose to fund a company. Oregon Angel Fund invests in four to seven companies each year in amounts ranging from $100,000 to $2,000,000. They invest in businesses in Oregon or Southwest Washington. Applications are accepted through gust.com or by contacting Oregon Angel Fund directly.
Portland Seed Fund
Portland Seed Fund was founded in 2011 with a focus on inclusivity in both funding and hiring. They work with entrepreneurs in any sector and are focused more on the potential for exceptional growth. They have a particular interest in products and services that are either in or peripheral to Oregon’s target economic sectors, including clean technology, high technology, health technology, apparel, food, and forestry and wood products. Their initial investments are usually small—around $50,000. From there, they may participate in follow-up financing rounds or connect companies with partners. They also connect companies with a network of experts, from lawyers to real estate brokers. Portland Seed Fund works with entrepreneurs in Portland and the Pacific Northwest. Applications can be submitted via the website.
Southern Oregon Angel Investors
Southern Oregon Angel Investors is a nonprofit organization located in Medford, Oregon. Its goal is to connect start-up ventures and existing companies with the capital that they need to grow or expand. Southern Oregon Angel Investors typically invest between $50,000 and $300,000. They are looking for local companies and start-ups who have the potential for scalable growth. In addition to providing funding, Southern Oregon Angel Investors offers advice and connections to its companies. Applications can be submitted via its website.
Cascade Angels is based in Central Oregon. Its mission is to create opportunities for both investors and businesses in Oregon to drive economic growth and increase prosperity. Cascade Angels is primarily focused on investing in Oregon and has invested close to $3,000,000 to date. A typical investment ranges from $100,000 to $250,000 but may be as high as $1,500,000. Businesses and start-ups in any industry are encouraged to apply at the seed and launch stage if they offer the potential for a healthy return. Applications can be submitted through gust.com.
TiE Global (The Indus Entrepreneurs) was founded in 1992 in Silicon Valley. It is a nonprofit venture devoted to entrepreneurship. It offers education, mentorship, networking, and funding. It currently has over 11,000 members worldwide in 60 chapters. It has funded 10,000 start-ups. Entrepreneurs can join TiE through its website. From there, they can submit an application to be considered for funding.
With a number of innovative funding opportunities and an advantageous tax climate, entrepreneurs in Oregon have a unique opportunity to start or expand a business. If you are considering either opening up a business or expanding your current business, Oregon may be an ideal choice.
Author: Jeff Gitlen