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Innovation Ohio Loan Program

Financial Resources For Northwest & West Central Ohio Entrepreneurs


Purpose of Program

Assists existing Ohio companies to develop next generation products and services within certain targeted industry sectors by financing the acquisition, construction and related costs of technology, facilities and equipment. Ohio’s manufacturing sector is be a key target of this program. This provides competitive financing terms on loans to finance projects that will positively impact Ohio by creating high-value jobs, increased tax revenues, and improve the economic welfare of the State of Ohio.It addresses an identified need in the capital-funding continuum and is intended to supply capital to Ohio companies having difficulty securing funds from conventional sources due to technical and commercial risk factors associated with the development of a new product or service.

Eligible Businesses

The Innovation Ohio Loan Fund will target industry sectors involving the production or use of advanced materials, instruments, controls, electronics, power and propulsion, biosciences; and information technology.

Investment Focus

The Innovation Ohio Loan Fund is intended to support the capital needs of established Ohio companies that have a recent history of positive cash flow, a minimum of three years of operating history and attracted or are likely to attract additional third party capital to the project.

Under limited circumstances, a company that does not have a recent history of positive cash flow may be considered if it has developed a proven product for a proven market, significant customer orders and reasonable prospects for rapid sales growth, and obtained the financial backing of professional investors and has reasonable prospects of continued backing from such investors. The Ohio Department of Development may require additional equity investment in the company as a condition to granting a loan.

Eligible Use of Funds

Eligible costs include the cost of acquisition, construction, renovation, expanding or improving project facilities, and the acquisition and installation of equipment for eligible innovation projects. Additionally, loan funds may assist with software development, and the cost of creating and protecting intellectual property including costs of securing appropriate patent, trademark, trade secret, trade dress, copyright or other forms of intellectual property protection for an eligible innovation project or related products or services. Allowable costs are limited to costs that can be capitalized under applicable generally accepted accounting principles (GAAP). The Innovation Ohio Loan Fund will not provide funding for working capital or other operating costs. It may not be used to refinance existing debt obligations.

Loan Amounts

Up to 75 percent of a project’s allowable costs to a maximum of $2 million and a minimum of $500,000.

Repayment Term

Applicants will propose the loan term, which should preferably be in the range of four to six years; although, in limited circumstances, the Ohio Department of Development may consider longer terms. In no event, however, will the loan terms exceed 15 years or the average useful life of the assets, whichever is earlier.

Interest Rates

The interest rate is be fixed at or below private sector loans for comparable levels of risk. The Innovation Ohio Loan Fund will bear an interest rate of prime plus up to two percent to be determined upon review of the application.


A $1,500 non-refundable application fee is required upon submitting an Innovation Ohio Loan Fund Application.

• A processing fee of two percent of the principal of the loan, due upon receipt of the signed Commitment Letter.

• An annual servicing fee of one percent of the outstanding principal balance of the loan, prorated and payable monthly.

• A participation fee equal to 10 percent of the maximum drawn principal will be payable upon maturity of the loan. This fee is in lieu of the Ohio Department of Development’s ability to take an equity position in the applicant company.


Collateral, Security

The Ohio Department of Development will require a first priority mortgage and/or security position on assets including intellectual property that qualify as allowable innovation costs financed with Innovation Ohio Loan Fund proceeds. In appropriate circumstances, the Ohio Department of Development will consider subordination of its mortgage and/or security position to the security position of banks and other providers of traditional senior debt. The following may be required: personal guarantees from owners with more than 20 percent ownership in the company, corporate guarantees from related companies, full or partial letter of credit, life insurance on key business owners and/or managers, and/or other types of credit enhancement, if necessary.


Participation Requirements

Additional Considerations

Applications will be reviewed by both the Ohio Department of Development and an outside reviewer as outlined in the Innovation Ohio Loan Fund Application. Factors that will be considered include, but are not limited to:

• Number of high-value jobs to be created as a result of the successful commercialization of a new product;

• Level of risk associated with the commercialization of the new product or service;

• Degree to which the applicant has attracted or will be able to attract additional third party capital;

• Degree to which the company’s business plan identifies the market need and demonstrates a feasible plan for serving that need;

• Level of financial risk and ability of the borrower to repay the loan.

The applicant must fund, either directly or through third-party financing (or some combination thereof), a minimum of 25 percent of the project’s allowable costs. The following are not acceptable as the applicant’s contribution:

• Expenditures made by or on behalf of the applicant prior to receiving approval from the Ohio Department of Development or submission of an Innovation Ohio Loan Fund application; and

• In-kind contributions of labor, equipment or similar items.

Ohio prevailing wage is required for construction, renovation, and installation of machinery and equipment. The Ohio Department of Commerce’s Wage and Hour Bureau determines rates and payment of prevailing wages.

Program Funding Source

How to Apply

Contact the Ohio Department of Development staff to discuss the project. Submit a completed Financial Assistance Application. An eligibility review and credit analysis will be conducted by the Ohio Department of Development staff.

Links to Loan Application and/or Specific Information

Ohio Department of Development
Strategic Business Investment Division
Office of Financial Incentives
77 South High Street, 28th Floor
Columbus, Ohio 43215-6130

Useful Information

Interest Rate Links

Business Management Links

Glossary of Important Financial Terms You Should Understand

How To Prepare A Business Plan to Obtain Money

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