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State Loans/Grants

Government & Community Assistance to Obtain Money

Minority Direct Loan Program

Financial Resources For Northwest & West Central Ohio Entrepreneurs


Purpose of Program

Provides direct loans for businesses locating or expanding in Ohio that demonstrate they will create new jobs for Ohio citizens.Eligible borrowers include any operating business entity which has been certified by the State Equal Opportunity coordinator as a Minority Business Enterprise.

Eligible Businesses

Eligible borrowers include any operating business entity which has been certified by the State Equal Opportunity coordinator as a Minority Business Enterprise and which demonstrates that its fixed asset expansion/retention project will create or retain jobs for Ohio citizens. The Minority Direct Loan Program may lend funds to businesses engaged in commerce, manufacturing, research and development or distribution. Under Ohio Revised Code Chapter 122.76 (A), other eligible borrowers include Community Improvement Corporations and Ohio Development Corporations.

Eligible Use of Funds

Funds received under the Minority Direct Loan Program may be used for part of the cost of acquisition, renovation or construction of depreciable fixed assets. This includes the following categories:

• Acquisition of land and buildings

• New construction

• Renovation to existing buildings

• Acquisition of machinery and equipment

In addition, limited soft costs related directly to the fixed asset expenditure may be included. Examples of eligible soft costs include: architectural/engineering costs; installation costs for machinery; and financing costs for bank loans.

Minority Direct Loan funds may not be used for:

• Working capital

• Refinancing

• Rolling stock

• Inventory/receivable financing

• Speculative real estate development

• Relocation costs

• Office equipment

• Small tools

• Supplies

Loan Amounts

The minimum direct loan under the Minority Direct Loan Program is $45,000.The maximum participation by the Minority Direct Loan Program in any one project cannot exceed 40 percent of the total fixed asset costs serving as collateral for the State loan.** The actual level of participation will be determined by the Department based upon the criteria described under “Criteria for Loan Application Evaluation.”

** Guidelines used by the Office of Minority Financial Incentives normally limit the loan amount to $450,000. However, the Director of Development may authorize a higher loan amount or modified terms which address a unique and demonstrated economic development need.

Repayment Term

The term cannot exceed 15 years for real estate financing, or 10 years for machinery financing.** The Minority Direct Loan term cannot exceed the term of the bank loan.

Interest Rates

The interest rate is currently set at 3 percent and it is a fixed rate.


A $300 nonrefundable application fee submitted at the  time of the filing of the application and a processing fee of 1.5 percent of the amount of the State loan which covers all legal expenses associated with the State’s processing of the loan


Collateral, Security

The State may request any of the following as collateral or security for the State incentive financing invested in a project: 

• Personal guarantees from owners;

• Corporate guarantees from related companies;

• First mortgage or lien position on the assets financed
with State funds (share with bank);

• Key person life insurance on the principal operating officer(s)
of the company;

• Financial covenants on the operations of the business; and

• Letter of credit 


Participation Requirements

Additional Considerations

The State requires that a conventional lender and the business itself participate in the project to the maximum extent possible. Preference will be given to projects, which maximize these sources.

The minimum amount of private lender participation required in the project is 30 percent of the Minority Direct Loan eligible project costs.

A typical Minority Direct Loan project structure would be:

• Bank Loan: 50 percent of total project cost

• Owner’s Equity: 10 percent of total project cost

• Minority Direct Loan: 40 percent of total project cost

Ohio prevailing wage is required to be paid for construction, renovation, and installation of machinery and equipment. Rates and payment of prevailing wages are determined by the Ohio Department of Commerce’s Wage and Hour Bureau.

Program Funding Source

How to Apply

Contact the Office of Minority Financial Incentives to discuss the project. File Financial Assistance Application along with a nonrefundable $300 application fee. All of the information requested (including MBE certification) must be submitted along with the Financial Assistance Application in order for the Department to proceed with its analysis.

Links to Loan Application and/or Specific Information

Ohio Department of Development
The Office of Minority Financials Incentives
P.O. Box 1001
Columbus, Ohio 43216-1001


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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