Direct 166 Loan Program

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  • The program requires the creation or retention of one job for each $15,000 of loan proceeds within a 3 year period. There is a Priority Investment Area map for eligible areas. The office of Strategic Research updates the map on January 1 st and July 1 st of each year.e
  • When are personal guarantees required? For privately held companies, occasionally we will consider a Letter of credit in lieu of a personal guarantee. If the company has sales greater than $150 million and impressive financial performance.
  • Direct 166 Loan Program

    1. 1. 166 Direct Loan <ul><li>166 Direct Loan Program </li></ul><ul><ul><li>The 166 Loan Program was created in 1982 to promote economic development in the State of Ohio. </li></ul></ul><ul><ul><li>Created a large revolving loan fund out of which loans are made. As repayments are collected, new loans are made. </li></ul></ul><ul><ul><li>The 166 Loan Program provides low-interest loans to businesses willing to commit to create new jobs or preserve existing employment opportunities in the State of Ohio. </li></ul></ul>
    2. 2. 166 Direct Loan <ul><li>Available Funding </li></ul><ul><ul><li>Loan amounts of $500,000 to $1 million </li></ul></ul><ul><ul><li>Typically between 30-50% of the projects allowable costs </li></ul></ul><ul><ul><li>Up to $15,000 per job ($35,000 in priority investment areas) </li></ul></ul><ul><ul><li>Partner with bank and equity </li></ul></ul><ul><li>Rate and Term </li></ul><ul><ul><li>Interest rates are fixed </li></ul></ul><ul><ul><li>Term conditions upon the useful life of the assets </li></ul></ul><ul><ul><ul><li>Maximum of up to 15 years for real estate </li></ul></ul></ul><ul><ul><ul><li>Maximum of up to 10 years for machinery and equipment </li></ul></ul></ul>
    3. 3. 166 Direct Loan <ul><li>Collateral /Security Requirements </li></ul><ul><ul><li>Shared first priority mortgage and/or lien position on assets financed loan proceeds </li></ul></ul><ul><ul><li>Personal guarantees from owners with 20% ownership in company </li></ul></ul><ul><ul><ul><li>May be required: </li></ul></ul></ul><ul><ul><ul><ul><li>Corporate guarantees from related companies </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Full or partial letter of credit </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Life insurance on key business owners </li></ul></ul></ul></ul><ul><ul><li>Equity Requirement - 10% of the loan amount </li></ul></ul><ul><ul><li>No pre-payment penalty </li></ul></ul><ul><ul><li>Take-out financing </li></ul></ul><ul><ul><ul><li>Funds will only be disbursed once the project has been completed. The borrower will be responsible for securing financing for project related cost through loan closing and project completion. </li></ul></ul></ul>
    4. 4. 166 Direct Loan <ul><li>Eligible Businesses and Costs include: </li></ul><ul><ul><li>Manufacturing, Research and Development, Distribution </li></ul></ul><ul><ul><li>Retail projects are ineligible </li></ul></ul><ul><ul><li>Fixed asset investments </li></ul></ul><ul><ul><ul><li>Land and building acquisition </li></ul></ul></ul><ul><ul><ul><li>Building expansion, renovation and construction </li></ul></ul></ul><ul><ul><ul><li>Equipment purchases </li></ul></ul></ul><ul><ul><ul><li>Acquisition of ongoing business fixed assets </li></ul></ul></ul><ul><ul><ul><li>Limited soft costs </li></ul></ul></ul>
    5. 5. For More Information: <ul><li>Web Site: </li></ul><ul><ul><li>For all ODOD debt financing information discussed today or more detailed information </li></ul></ul><ul><ul><li>http://development.ohio.gov/EDD/Loans_Grants.htm </li></ul></ul><ul><li>Questions? Contact: </li></ul><ul><li>Office of Financial Incentives </li></ul><ul><li>State of Ohio, Department of Development </li></ul><ul><li>(614) 466-5420 </li></ul>
    6. 6. Ohio Department of Development Financing Programs Ohio Economic Development Association Office of Financial Incentives October 14, 2009

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