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Research & Development Investment Loan Fund

Financial Resources For Northwest & West Central Ohio Entrepreneurs

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Purpose of Program

Promote economic development, business expansion and job creation in Ohio by encouraging private-sector research and development investments. The Ohio Department of Development’s Research and Development Loan Fund provides assistance in the form of a low-interest loan, partnered with a tax credit.

Eligible Projects

Eligible projects are defined as those in which research is undertaken for the purpose of discovering and developing new or improved products, processes, techniques, formulas, or inventions. It is expected that project employment will be comprised of a significant representation of scientists, researchers, and technicians. There must be a commitment to create or retain jobs to the State of Ohio. While there is not a specified dollar per job ratio, the number of jobs committed, as well as the annual payroll, will be considered when determining the funding amount.

Eligible Use of Funds

Eligible project costs include the following:

• Purchase of land and/or building; if the project involves the purchase of an existing building, the business must occupy at least 51 percent of the premises

• Purchase of machinery and equipment • Building construction and/or renovation costs; if the project involves new construction,the business must occupy at least 75 percent of the premises

• Long-term leasehold improvements

• Purchase of an ongoing business’ fixed-assets

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

Refinancing is ineligible

Loan Amounts

The R&D Fund can finance up to 50 percent of a project’s allowable costs, with loans ranging in size from $1.0 to $5 million.

Repayment Term

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

Interest Rates

Interest rates for are fixed at/or below market rates and typically do not exceed 1⁄2 of the current prime rate.

Fees

A $1,500 non-refundable application fee is required upon filing a completed Financial Assistance Application.

A processing and commitment fee of one percent of the loan amount up to a maximum of $50,000, due upon receipt of a signed loan commitment letter.

An annual servicing fee equal to a quarter of one percent (.25 percent) of the outstanding principal balance of the loan, pro-rated and payable monthly.

Prepayment

Collateral, Security

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

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.

Assignment

Participation Requirements

Additional Considerations

The applicant must fund, either directly or through a third party (or some combination thereof), at least 50 percent of the project’s allowable Research and Development Fund costs.

The program provides a non-refundable tax credit of up to $150,000 per year against a company’s Ohio tax liability or an individual’s Ohio personal income tax. Before a taxpayer can claim a credit on its tax return, it must first receive a tax credit certificate from the Ohio Department of Development certifying that the company is meeting the terms of its loan agreement. To receive a tax credit certificate, the company must file an annual progress report with the Ohio Department of Development by March 1st for the entire term of the loan.

Ohio prevailing wage is required 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 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

http://www.development.ohio.gov/Business/documents/ResearchDevelopmentInvestmentLoanProgram.pdf

Ohio Department of Development
Strategic Business Investment Division
Office of Financial Incentives
77 South High Street, 28th Floor
Columbus, Ohio 43215-6130
614-466-5420
1-800-848-1300
financialincentives@development.ohio

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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