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Ohio Minority Business Direct Loan Program

a business owner sitting at a table working on applying for a loan

The program provides fixed, low-interest rate loans to certified minority-owned businesses that are purchasing or improving fixed assets resulting in the creation of new jobs for Ohioans. The Minority Business Direct Loan Program determines the eligibility of a business by:

  • Evaluating the number of jobs created or retained.
  • Participation of the business and a conventional lender in the project.
  • Demonstrating that the state's assistance is necessary in order for the project to go forward.

In its review of loan applications, the office also evaluates the management capacity of the company, the availability of working capital, and the overall ability of the company to repay its debt. These criteria are designed to provide a more definitive review of the applicant’s need and capabilities.

The state’s financing is take-out financing. In other words, the business will need to complete its project utilizing interim financing from a conventional lender and the business’ equity. When the project is completed, the state’s funds will be released.

Use of Funds

Funds received under the Minority Direct Loan Program may be used for part of the cost of acquisition, renovation, or construction of depreciable fixed assets.

This includes the following categories:

  • Acquisition of land and buildings.
  • New construction.
  • Renovation to existing buildings.
  • Acquisition of machinery and equipment.

In addition, limited soft costs related directly to the fixed-asset expenditure may be included. Examples of eligible soft costs include architectural/engineering costs, installation costs for machinery, and financing costs for bank loans.

Minority Direct Loan funds may not be used for:

  • Working capital.
  • Refinancing.
  • Rolling stock.
  • Inventory/receivable financing.
  • Speculative real estate development.
  • Relocation costs.
  • Office equipment.
  • Small tools.
  • Supplies.

Eligible Borrowers

Eligible borrowers include any operating business certified by the State of Ohio as a Minority Business Enterprise (MBE) and demonstrate that its fixed-asset expansion/retention project will create or retain jobs for Ohioans. The business must have its principal place of business and its business operations located in Ohio.

The Minority Business Direct Loan Program may lend funds to businesses engaged in commerce, manufacturing, research and development, or distribution.

Under Ohio Revised Code Chapter 122.76 (A), other eligible borrowers include Community Improvement Corporations and Ohio Development Corporations.

Minority Business Direct Loan Amounts

The minimum direct loan under the Minority Business Direct Loan Program is $45,000.

The maximum participation by the Minority Business Direct Loan Program is based on financing needs but cannot exceed 75% of eligible project costs.**

The actual level of participation will be determined by the Ohio Department of Development based upon the criteria described under “Criteria for Loan Application Evaluation.”

** Guidelines used by the Minority Business Development Division normally limit the loan amount to $450,000. However, the Director of the Department of Development may authorize a higher loan amount or modified terms that address a unique and demonstrated economic development need.

Interest Rate

The interest rate for Minority Direct Loan financing is currently set at a fixed rate of 3 percent.


The term on the Minority Business Direct Loan will be based upon:

  • The useful life of the assets being financed.
  • The term of the bank loan in the project.

The term on a Minority Business Direct Loan cannot:

  • Exceed 15 years for real estate financing or 10 years for machinery financing.**
  • Exceed the term of the bank loan.

** Guidelines used by the Minority Business Development Division normally limit the loan amount to $450,000. However, the Director of the Department of Development may authorize a higher loan amount or modified terms that address a unique and demonstrated economic development need.

Private Financing Requirements

Minority Business Direct Loan Project Structure

Bank 50%
Owner's Equity 10%
Minority Direct Loan 40%
Total 100%

Collateral/Security for State Loan

The state may request any of the following as collateral or security for the financing invested in a project:

  • Personal guarantees from owners.
  • Corporate guarantees from related companies.
  • First mortgage or lien position on the assets financed with state funds (share with bank).
  • Key person life insurance on the principal operating officer(s) of the company.
  • Financial covenants on the operations of the business.
  • Letter of credit.
  • Fees.

The Minority Direct Loan Program requires the payment of two fees:

A $300 nonrefundable application fee submitted at the time of the filing of the application and

a processing fee of 1.5 percent of the amount of the state loan, which covers all legal expenses associated with the state's processing of the loan.

Prevailing Wage

Companies receiving assistance under the Minority Direct Loan Program are not required to complete their project utilizing the Ohio Prevailing Wage for construction, renovation, and machinery installation.

Criteria for Loan Application Evaluation

The following areas will be evaluated by the Department of Development staff in making a determination that the business is eligible to receive Minority Business Direct Loan financing:

  • Ability to Repay.
  • Management.
  • Working Capital.
  • Need.
  • Job Creation.
  • Job Retention.
  • Minimum Assistance Necessary.
  • Occupancy.
  • Collateral.

How to Apply

The first step is to complete the preliminary eligibility information form. After that is submitted, you will be contacted for an eligibility interview with our staff, or you will be referred to your area Minority Business Assistance Center for help with state certification.

Start the process here

Frequently Asked Questions

What is the least amount I can borrow under each loan program?

  • The Ohio Micro-Loan (Micro-Loan) Program minimum is $10,000.
  • The Women’s Business Enterprise (WBE) Loan Program minimum is $45,000.
  • The Ohio Minority Business Direct (MBD) Loan Program minimum is $45,000.

What is the maximum loan amount I can borrow under each loan program?

  • The Micro-Loan maximum is $45,000.
  • The WBE Loan maximum is $500,000.
  • The MBD Loan maximum is $1.5 million.

Which loan programs must I be state-certified as a Minority Business Enterprise (MBE) or Women-Owned Business Enterprise (WBE) to qualify for?

  • MBE or WBE certification is required for the Micro-Loan Program.
  • MBE certification is required for the MBD Loan Program.
  • It is recommended for the WBE Loan Program, but it is not required. Women’s Business Enterprise National Council (WBENC) certification also is accepted.

How long does my operating company have to have been in business and generating revenue to qualify for these loan programs?

  • One year for the Micro-Loan Program.
  • Two years for the WBE Loan Program.
  • Three years for the MBD Loan Program.

Do you assist startup businesses?

We can help startup businesses with business planning and counseling through our Minority Business Assistance Centers and other business services in the Department of Development. Startups are not eligible for these loan programs until they reach the milestones listed above.

Are these loans forgivable?

No, they have set terms, rates, and fees.

Can I apply for more than one loan program at a time?


Can I apply for the loan before my certification has been approved?

No, you must complete your certification before applying for the Micro-Loan Program and the MBD Loan Program. The WBE Loan Program does not require certification, but it is recommended.

Is there a way to have my certification expedited?

Yes, you must request your certification to be expedited through the Minority Business Assistance Center in your area.

What are eligible uses of funds for each loan program?

  • The Micro-Loan can be used for any working/operating capital need, refinancing business debt, inventory, equipment, machinery, etc.
  • The WBE and MBD loans can be used for purchasing commercial real estate and property, renovations, leasehold improvements, machinery, and equipment.

What are the interest rates, fees, and terms?

  • The Micro-Loan interest rate is 0%. There is no application fee. No client equity required, and there is no commitment fee. The loan term is five years or up to seven years for equipment/machinery.
  • The WBE Loan interest rate is 3%, but if you are state-certified as a Women-Owned Business Enterprise, the interest rate is 1.5%. The loan term is up to 10 years for equipment or 15 years for purchase of commercial real estate. There is a 1.5% commitment fee of the total loan amount. There is a $300 application fee.
  • The MBD Loan interest rate is 3%. The loan term is up to 10 years for equipment or 15 years for purchase of commercial real estate. There is a 1.5% commitment fee of the total loan amount. There is a $300 application fee.

What additional documents do I need to upload to the application?

  • Three years of tax returns with all schedules included. If you are a sole proprietorship, personal tax returns. Form 1040, including Schedule C-business revenues. Less common schedules, Schedule A, capital gains, and Schedule E for real estate investors.
  • If any other business structure: Form 1065 for Partnerships and 1120-S for corporations are the most common, including Schedule K-1, partnership income.
  • Year-to-date financial statements: Balance sheet and income statement that are within 60 days of application submission.
  • Debt Schedule, including (1) outstanding balance, (2) monthly payment, and (3) maturity.
  • Projections for next two business years per program guidelines.
  • Personal financial statement for all personal guarantors.
  • Management Information:Provide owners’ individual resume, capability statement, or executive summary from your business plan. Include information about your business operations, how your business will benefit with competitive advantages pursuing this project, and the owners’ expertise and/or previous experience in this industry.
  • Sources and uses:
    • If machinery and/or equipment, provide invoice(s), including technical specifications and pricing.
    • If a vehicle, provide official dealer documentation, including VIN number. Only vehicles for exclusive use of the business (commercial type) are allowed.
    • If real estate, provide official documentation (e.g., real estate contract, land) and details of the proposed purchase. Investment and residential real estate of any type are not allowed.
    • If leasehold improvements/renovations, provide documentation, including but not limited to proposed budget, construction schedule, and/or cost estimates.
    • If payroll/hiring, how many employees will be hired as result of the project besides stockholders/owners.