Overview of Financing Process

Applying Is Easier Than You Think!
Do you need financing for land, buildings or equipment? Have you thought about an OSDC loan but are concerned the “red tape” is too much? Don’t be afraid – just be prepared! If you’ve kept reasonable records over the years (tax returns, financial statements, etc.) and your business is healthy, then the application process for an OSDC loan may be less cumbersome than you think.

What are the Benefits of an OSDC Loan?

  • Interest rate is fixed and generally lower than bank rates.
  • Terms are 10 or 20 years depending on collateral; shorter terms for equipment available.
  • Provides funding up to 40% of total project costs.
  • Typically only requires 10% equity injection.

What are the Steps to Apply for an OSDC Loan?

  • Contact OSDC to arrange for a visit to determine eligibility for loan.
  • Submit business and personal financial information to OSDC (many times this is already available from your bank with your consent).
  • OSDC reviews your request, conducts a credit analysis and forwards proposal to OSDC Board for approval.
  • OSDC Board reviews and recommends approval of loan.
  • OSDC prepares an application package and submits to either the US Small Business Administration (SBA) or the State of Ohio Department of Development (ODOD).
  • If approved by SBA, a 504 loan commitment or authorization is issued.

Little Known Fact: The above steps can be completed in as little as 30-60 days from the initial contact with OSDC to final approval!

Financing Process

The loan process typically begins with a lender or business contacting OSDC to discuss the project. At this point a loan checklist will be sent to the bank or the borrower. OSDC staff will meet with the banker, borrower or both to discuss the project and answer any questions.

After receiving the required documents, OSDC prepares a loan analysis that is submitted to the OSDC board for approval. Once approved, an OSDC loan officer prepares the application package and provides the borrower with any forms that require completion and signature. The loan is then submitted to the Small Business Administration (SBA) or to the Ohio Department of Development (ODOD) for final approval. OSDC usually receives written SBA approval in 10 business days or less. ODSA approval takes up to 45 days to allow time for the project to be considered by the Ohio State Controlling Board.

The entire approval process can take as little as 30 days from the receipt of the completed loan checklist, depending upon the characteristics of the project.

When 504 Financing Makes a Difference

When business cannot afford to put more than 10% cash into project

  • Especially in cases of more expensive building acquisition/construction when there is only one business owner.
  • Example: Construction of modern veterinary hospital with boarding facilities

When business has a short track record – not long enough for conventional standards.

  • A young (less than two years old) company that hasn’t had time to build retained earnings and has just begun to show profitability.
  • Start-ups can be eligible in some cases

When business is in a high-risk industry that discourages conventional lenders.

  • Examples: restaurants, tourism related, recreational
    When project real estate is special purpose and not able to attract sufficient conventional capital.
  • Examples: hotels/motels; convenience stores/gas stations; long-term care facilities.

When business history doesn’t show ability to support project debt.

  • Selected startup situations; fast growth company; business that has experienced recent financial crisis.
    When an established business is moving aggressively into new market or new production process.
  • Business that is moving into the manufacture of a product it has been distributing.