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Government & Community Assistance to Obtain Money

Pioneer Rural Loan Program

Financial Resources For Northwest & West Central Ohio Entrepreneurs


Purpose of Program

Provide low-interest direct loans for businesses locating or expanding in Ohio’s rural areas. Eligible areas include counties with labor surplus, distressed counties and situationally distressed counties. Businesses must demonstrate that they will create new jobs for Ohio citizens in rural areas.

Eligible Businesses

Eligible businesses include those engaged in manufacturing, research and development, distribution, and certain service-related companies. Preference is given to companies creating quality jobs. Retail projects are ineligible for the Regional Loan Programs.

Eligible Use of Funds

Eligible Project Costs

• Purchase of land and/or building

• Purchase of machinery and equipment

• Building construction and/or renovation costs

• Long-term leasehold improvements

• Purchase of ongoing business’ fixed-assets

• Limited soft costs directly related to the fixed-asset purchase

Ineligible Project Costs

• Working capital

• Refinancing

• Rolling stock

• Inventory/receivable financing

• Speculative real estate development

• Relocation costs

• Molds and dies

Loan Amounts

May finance seventy-five percent (75%) of total eligible projects costs directly related to the fixed- asset purchase. The maximum loan amount is $350,000. Businesses requesting more than $350,000 may participate in the Ohio Department of Development Direct Loan Program (contact Ohio Department of Development staff for further information). The Ohio Department of Development requires, under the Regional Loan Programs, the creation or retention of one job for each $35,000 of loan proceeds within a three-year period.

Repayment Term

The term of any loan should reflect the term of the bank. It is conditioned upon the useful life of the financed assets with the maximum limit up to 15 years for real estate and up to 10 years for machinery and equipment.

Interest Rates

Interest rates for the Regional Loan Programs are established by the Regional Loan Agency; however, the rate cannot exceed two-thirds (2/3) of prime rate.


Administrator shall have the right to charge and collect from the borrower the following:

• Application Fee: An application fee in an amount not to exceed one thousand dollars

• Processing Fee: A processing fee in an amount not to exceed two percent (2%) of the loan amount, which shall be used for services rendered in the processing of the application.

• Servicing Fee: A monthly servicing fee in an amount not to exceed one-twelfth of one-fourth of one percent (.0025/12) of the outstanding principle balance.


Collateral, Security

The Ohio Department of Development will require a shared first priority mortgage and/or lien position on assets financed with the loan proceeds to be established via a multi-party agreement between the participating lender(s), the Ohio Department of Development and the borrower.

All assets offered, as collateral for the Regional Loan Programs, must have third party evaluation (i.e. appraisal) and an environmental clearance. The Ohio Department of Development will accept what the bank accepts (i.e. an environmental questionnaire and document check in lieu of a Phase I Environmental Review or bank evaluations in lieu of appraisals).

No transfer of ownership without the approval of the Director. If sold, the regional loan must be paid-off as part of the sale; however, assumptions may be considered on a case-by-case basis.

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

If the applicant is claiming retained jobs for the Regional Loan Programs financing, they must clearly state why the jobs are at risk.

The Ohio Department of Development requires, under the Regional Loan Programs, a minimum of ten percent (10%) owner’s equity. Start-ups require a minimum of twenty percent (20%).

The applicant must demonstrate that all facilities financed by the program will reach a reasonable occupancy level within one-year after completion. If a project involves the construction of a new building, at least seventy-five percent (75%) of the building must be occupied by the operating business. If a project involves the purchase and/or renovation of an existing building, at least fifty-one (51%) of the building must be occupied by the operating business.

Prevailing Wage rates will apply to any costs associated with the installation of such machinery and equipment, including any construction or retrofitting of a facility specified as part of the Project. The Ohio Department of Commerce’s Wage and Hour Bureau determine 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
614-455-4551 or 800-848-1300 ext. 64551

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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