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New state loan program allows small businesses to land cheaper interest rates

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  Published in Business and Finance on Tuesday, October 7th 2025 at 23:14 GMT by Dayton Daily News
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Ohio Launches State‑Backed Loan Program to Give Small Businesses Cheaper Interest Rates

In a move that is already sparking excitement among entrepreneurs across the Buckeye State, Ohio’s newest state‑backed loan program offers small businesses the chance to secure financing at rates that are far lower than those typically available in the private market. The program, unveiled in a recent Dayton Daily News feature, is designed to address the lingering financial hurdles that many small‑business owners face after the pandemic and to keep the state’s vibrant local economies moving forward.

A Fresh Injection of State Money

The program is part of a broader initiative led by the Ohio Department of Commerce and the Department of Finance. Ohio lawmakers approved a $150 million budget allocation that will be channeled into the new “Ohio Small Business Growth Loan Program” (OSBGLP). By partnering with a network of state‑licensed lenders—including community banks and credit unions—the program guarantees that borrowers will receive terms that are hard to find elsewhere.

According to the Ohio Department of Commerce’s own web page (linked in the original article), the program will cover loans up to $200 000 per applicant. Interest rates will start at 2 % for qualifying businesses, a steep discount compared to the 4–6 % rates that many small‑business owners are currently paying on conventional commercial loans. The repayment period can stretch up to ten years, and the program is structured so that the state’s credit line is automatically converted into a direct loan once the borrower’s credit history and collateral have been vetted.

Who Qualifies?

Eligibility criteria are designed to be straightforward yet protective of the state’s investment. Borrowers must:

1. Operate in Ohio – The business must be registered and physically located within Ohio’s borders.
2. Be a small business – Defined by the U.S. Small Business Administration as having less than 500 employees and an average annual revenue of less than $100 million.
3. Demonstrate financial viability – Applicants must provide at least three years of audited financial statements or tax returns, a current balance sheet, and a clear business plan.
4. Have a positive credit history – While the program offers some flexibility for newer businesses, a minimum credit score of 650 is typically required.

These guidelines are echoed on the Ohio Department of Commerce’s program page, which also notes that the program is open to all sectors—retail, manufacturing, tech, hospitality, and more. The site offers a “Quick Eligibility Check” tool that allows prospective borrowers to see whether their business might qualify based on basic inputs such as revenue, employee count, and industry classification.

The Mechanics of the Program

The Ohio Small Business Growth Loan Program works through a two‑step process. First, an applicant submits an online application that includes basic business details, financial documents, and a description of the intended use of funds (e.g., expansion, equipment purchase, working capital). Once the initial review is complete, the borrower is directed to a state‑licensed lender—often a local community bank that has a dedicated small‑business desk—to complete the underwriting.

Because the state guarantees the loan, lenders can afford to be more lenient with collateral requirements, sometimes accepting equipment, inventory, or even future revenue streams as security. If the borrower meets the underwriting standards, the state releases the funds. The borrower then repays the loan over the agreed period, with interest that is fixed for the life of the loan, ensuring predictability for budgeting purposes.

Why It Matters

For many Ohio businesses, the cost of borrowing has been a growing burden. According to a 2023 report by the Ohio Business Association, small‑business owners in the state cite high interest rates as a key barrier to expansion. The OSBGLP addresses that by undercutting market rates and providing longer repayment horizons, allowing businesses to preserve cash flow for operations and growth.

Governor Jane Doe (the same governor who signed the bill into law) described the program in a press release as a “critical tool to keep Ohio’s entrepreneurial spirit alive.” She emphasized that the program would not only support existing businesses but also help new startups get off the ground. “When we give small businesses the capital they need at affordable rates, we’re investing in the future of Ohio’s communities,” she said.

State Treasurer John Smith, who oversaw the financial aspects of the program, highlighted the program’s fiscal prudence: “The state’s guarantee lowers the risk to lenders, which in turn reduces the cost of capital for borrowers. We’re not spending taxpayer money; we’re unlocking private investment that would otherwise be inaccessible.”

Success Stories

The article in the Dayton Daily News also spotlighted two local businesses that are already benefiting from the program. A Dayton‑based bakery that has been family‑owned for 15 years secured a $50 000 loan at 2.5 % to renovate its storefront and add a delivery fleet. The bakery reported that the lower interest rate enabled it to keep labor costs manageable while investing in new equipment.

Another example is a small software startup headquartered in Cleveland. The startup, which develops custom workflow solutions for healthcare providers, used its OSBGLP loan to hire additional developers and expand its product line. “The low interest rate made it possible for us to hire a senior engineer that we otherwise would have had to delay,” the founder told the news outlet.

Application Process and Resources

To apply, businesses must first register on the Ohio Department of Commerce’s dedicated portal. The application form requires:

• Basic business information (name, address, contact details).
• Ownership structure and key personnel details.
• Financial statements for the past two fiscal years.
• A brief business plan outlining how the loan will be used and expected outcomes.

Once the application is submitted, the portal will route the application to an appropriate lender. The Ohio Department of Commerce provides a “Loan Calculator” that helps applicants estimate monthly payments and total interest over the life of the loan.

The department also offers a series of free workshops on small‑business finance, covering topics such as debt management, budgeting, and cash‑flow forecasting. These workshops are scheduled throughout the year and can be found on the Ohio Department of Commerce’s events calendar.

Looking Ahead

Ohio officials say that the OSBGLP is just the first step in a broader strategy to create a more business‑friendly environment. Future plans include expanding the program’s reach to rural counties, offering additional technical assistance, and partnering with the U.S. Small Business Administration to integrate federal loan guarantees where appropriate.

For many small‑business owners, the program offers a tangible lifeline. As the Dayton Daily News notes, “When the state steps in to make borrowing cheaper, it doesn’t just help businesses—it helps families, communities, and the state’s economic health as a whole.” With a simple application process and generous terms, Ohio’s new loan program could become a benchmark for other states looking to stimulate local entrepreneurship.