The Minority Business Bonding Program provides bid, performance, and payment surety bonds to state certified minority-owned businesses that are unable to obtain bonding through standard surety companies. To be eligible for this program, the project must be economically feasible, and the minority business must not have defaulted on a previous bond issued by the Ohio Department of Development.
The maximum bonding line prequalification is $1 million per business. The premium for each bond requested is 2 percent of the face value of the bond. The business must demonstrate the benefit to Ohio residents by increasing employment opportunities. The collateral and/or security are the personal guarantees of the principals and persons substantially involved in business operations, and other such collateral as warranted.
All applicants must meet the following criteria:
- Be defined as a "Minority Business" as set forth in Section 122.71(E) (1) of the Ohio Revised Code.
- Be certified by the Equal Opportunity Division of the Department of Administrative Services as a Minority Business Enterprise (MBE).
- Applicant must not have defaulted on a previous bond issued by the Department of Development and no general or limited partner or shareholder in the minority business enterprise may have defaulted on a previous bond issued by the Department.
All projects must meet the following criteria:
- Be economically sound.
- Benefit the people of the state by increasing opportunity for employment.
- Expand the Minority Business Enterprise.
The applicant must meet the following criteria:
- Demonstrate adequate insurance coverage on its business operation and key employees.
- Have a line of credit equal to or greater than 20 percent of the bonded amount, or
- Demonstrate sufficient financial resources to justify a lesser credit facility.
Once accepted into the program, businesses will be required to provide quarterly financial statements prepared by an independent certified public accountant, a licensed public accountant, or a preparer acceptable to the Department of Development to maintain their eligibility.
The Department will require removal of state tax liens.
There is no fee for Minority Business Bonding Program application, and there is no fee for bid bonds if the applicant's bid is not successful.
The applicant shall pay a premium in advance for each bond to be issued by the Department. This is not to exceed 2% of the penal sum of the bond. The premium may be adjusted upward or downward if the contract amount is changed by more than the less of 5% or $10,000.
How to Apply
Step 1: Contact Andre Conner, Manager of Business Solutions, Minority Business Development Division, to begin application process.
Step 2: Documentation will be reviewed by the Minority Business Development Division for eligibility.
Step 3: If eligible, Minority Business Development Division will present to Minority Development Financing Advisory Board (MDFAB).
Step 4: If approved by MDFAB, request will be sent to State Controlling Board for approval and disbursal of state funds.
Step 5: If approved, the Department of Development will prepare Commitment Letter between state and borrower that must be signed.
The review and approval process begins when the company submits a bonding application. The application and supporting documentation are then reviewed by the Minority Development Financing Advisory Board, which meets every fourth Tuesday.
The Minority Development Financing Advisory Board will:
- Weigh financial viability (history of profits on a majority of contracts is expected), capacity to perform, and collateral.
- Expect current ratios of at least .98:1 and debt ratios of less than 5:1.
- Evaluate applicant’s banking relationships.
- Evaluate whether the applicant has demonstrated ability to compete in the private sector.
- Consider the job generation potential of the project and/or applicant.
- Consider the positive impact to the state of granting the requested assistance to the applicant.
The Board will not consider applicants that:
- Submit inaccurate or incomplete information.
- Submit financial statements that are not reliable.
- Have filed a Chapter 7 or 11 bankruptcy in the past three years.
If approved, the application will be submitted to the State Controlling Board for approval, and a prequalification letter will be issued to the company to allow it to submit request(s) for actual bond issuance.