Entrepreneurship is a critical component of any community. So, how can we support entrepreneurial growth? One tool available to communities interested in helping entrepreneurs start businesses and facilitating the expansion or relocation of existing businesses is a Revolving Loan Fund (RLF). The principal goal of the RLF is to create and retain private sector jobs, of which 51 percent must be held by persons from low-to-moderate income households. Applicants must document job creation for any RLF money borrowed and one (1) full time equivalent job must be created for every $25,000 increment borrowed. Applicants have two years to fulfill the job requirements. Loans can be made to businesses for land and building acquisition, new construction, building renovations and improvements, machinery and equipment purchases, and working capital. Loans involving construction and building renovations and improvements are subject to national prevailing wage requirements should the labor exceed $2,000.
This program allows businesses to secure fixed low interest rate loans. Two types of loans exist: Economic Development loans and Micro loans; however, each community may not offer both loan types. Most businesses apply for an Economic Development loan, which is a combination of owner equity, private funding (bank loan), and RLF money, to secure their project financing. Economic Development loans can be made for up to 50 percent of the project total. The Micro Loan option allows for RLF money to be the sole funding source for businesses with five or fewer employees undergoing projects less than $35,000 and capable of meeting the income requirements.
For more information, please visit the Ohio Development Services Agency Community and Economic Development Programs page. Communities interested in starting a revolving loan fund should review the information on the PY 2016 CDBG Community Development Program Notice of Funding Availability (NOFA) and Training Forum announcement and submit their application by Friday, June 17, 2016.
(Submitted by Caitlin Jones, Program Coordinator, Van Wert County & Maumee Valley EERA)