List Of Financing Alternatives for Manufacturing Companies In Ohio - 2024

Updated on August 12, 2024

Manufacturing companies in Ohio have many ways to strengthen their finances and grow. They can choose from bank loans, grants, to cutting-edge fintech and more. Understanding these options can help Ohio manufacturers tackle money issues. It can also help them innovate and expand.

For example, invoice factoring is great for quick cash. 1st Commercial Credit provides such services, making it easier to get working capital. This is easier than getting a traditional loan¹. This flexibility is key for manufacturers who need steady cash to keep things running smoothly.

This guide sheds light on different financing ways meant just for Ohio's manufacturing firms. It covers everything from loans to grants and fintech. This article shares tips on getting the funds needed for growth. Ohio manufacturers will find helpful advice for making smart money choices.

Key Takeaways

• Ohio manufacturers can explore both traditional and modern financing alternatives.
• Invoice factoring offers quick access to working capital without collateral requirements.
• Grants such as the Warrior Rising Grant provide specific support to diverse business types¹.
• Fintech solutions are making capital more accessible and managing finances easier².
• Non-bank financial institutions offer tailored solutions for manufacturers facing unique financial challenges.

Introduction to Financing Alternatives in Ohio

Ohio's manufacturing companies have many financing options. Each one fits different needs and goals. Knowing these options is key, whether it's for starting up or expanding. This overview talks about traditional and non-traditional ways to get money for various needs.

Traditional financing like bank loans requires a thorough check but offers a lot of money. Non-traditional options, like fintech solutions, are more flexible and give fast access to funds. Financial technology has grown, giving businesses new ways to meet their financial needs. This helps them grow.

There are federal programs like SBA loans that help small businesses with good terms. This makes them a great choice for getting funds³. Ohio has also shown strong community support for federal funding, with over 160 letters of support⁴.

Governors are considering new ways to support infrastructure with federal funds. Options include Public-Private Partnerships (P3s) and long-term asset concessions. These methods bring in private money, helping businesses grow by injecting a lot of capital⁵. Also, there's planning for affordable financing to promote energy efficiency and clean energy in underserved areas in Ohio⁴.

Finally, picking the right financing option should match a company's financial situation and industry. Ohio's manufacturing firms can use bank loans or new fintech options. There are many ways to find the money needed for growth and expansion.

Traditional Bank Loans in Ohio

Traditional bank loans are a key way to get money, especially for manufacturing companies in Ohio. They have secured and unsecured term loans with different interest rates and repayment plans. This meets various business needs.

Secured Term Loans

Secured term loans need something valuable, like property or stock, as a promise to pay back. These loans have lower interest rates, making them a good pick for growing a manufacturing business. They are great for businesses wanting a strong financial base to expand.

Unsecured Term Loans

Unsecured corporate lending doesn't ask for a guarantee but looks at the borrower's credit. These loans have higher interest rates because they are riskier for lenders. KeyBank and U.S. Bank offer loans up to $500,000 and $200,000. They give companies options without needing to promise assets⁶.

Business Lines of Credit

Business lines of credit are flexible, letting companies borrow up to a set limit when they need it. These options are perfect for fixing short-term cash problems or unexpected costs. They help businesses stay stable and keep running smoothly.

Even though traditional bank loans have great rates and loan choices, they also have tough requirements. This was pointed out in the 2024 Federal Reserve Banks' Report on Employer Firms⁷.

Small Business Administration (SBA) Loans in Ohio

The U.S. Small Business Administration offers loan programs for small Ohio manufacturers. These SBA loans are great for businesses that might not get regular bank loans. They have lower interest rates and flexible payment terms.

7(a) Loans

The 7(a) program is very popular. It lets Ohio businesses borrow up to $5 million. This money can be used for working capital, to buy equipment or pay off debt. These loans are flexible and help meet various needs. Through SBA financing⁸, lenders take less risk. Hence, small businesses find it easier to get these loans⁸.

504 Loans

504 loans focus on long-term property and equipment investments. They offer up to $5.5 million to Ohio businesses. This is perfect for manufacturers wanting to grow or buy machinery. These loans fill in when traditional banking doesn't work⁸.

Furthermore, 504 loans boost local economies. They help companies create jobs and grow⁸.

Microloans

Microloans give up to $50,000 for immediate business needs. They're ideal for Ohio startups needing funds for inventory or working capital. Support like counseling and planning is available from SBDCs and SCORE chapters. This makes business growth smoother and faster⁸.

Fintech Solutions for Manufacturing Companies in Ohio

Manufacturing companies are finding new ways to finance their growth through fintech. They use online lending, peer-to-peer lending, and robo-advisors. These tools have changed finance a lot. The Cincinnati area, rich in financial institutions, is perfect for fintech growth⁹.

Online Lending Platforms

Online lending platforms help companies get financing quickly and easily. They're faster than banks and less of a hassle. The region's financial jobs have grown by 7.3%, making innovations like these possible⁹.

Peer-to-Peer Lending

Peer-to-peer lending lets companies borrow directly from investors, skipping the banks. It offers a more personal touch and flexible terms. This market is growing, thanks to fintech companies that meet high standards⁹. Cincinnati's 37,000 computer science grads help these platforms thrive.

Robo-Advisors

Robo-advisors use algorithms to give low-cost investment advice. They're great for companies wanting to manage investments smartly. Ascendum Solutions is a leader in this, showing how digital tools help various industries¹⁰. With firms like Ascendum innovating, manufacturers can manage their finances better.

Grants for Manufacturing Companies in Ohio

Grants are crucial for Ohio's manufacturing companies. They provide financial help that doesn't need to be paid back. This support comes from various levels, including federal, state, and local agencies, as well as industry-specific sources.

Federal Grants

Federal support is a big deal, offering grants to boost different sectors like manufacturing. At Grants.gov, businesses can find about $500 billion a year in federal grants¹¹. The SBIR and STTR programs are all about R&D for tech innovation and scientific research¹². The U.S. Small Business Administration's PRIME helps microenterprise development¹². The U.S. Economic Development Administration (EDA) backs economic development projects with its grants too¹³.

State and Local Grants

Ohio has grants designed for regional economic growth, offering crucial aid to manufacturers. The Ohio Development Services Agency provides local grants that support regional economic development. For instance, there are grants for entrepreneurship among undergrads and skill development for the previously incarcerated¹¹. Grants like those from the Texas Enterprise Fund help seal deals based on investment and job creation¹³. The U.S. Department of Agriculture also pitches in, supporting rural business growth and aiding manufacturing companies in these areas¹³.

Sector-Specific Grants

Sector-specific grants push for innovation in manufacturing and other areas. They focus on tech, food service, e-commerce, transportation, and manufacturing projects¹¹. The Immersive Delivery and Experiential Entrepreneurship Alternative (IDEEA) project offers seminars and labs. These help enhance skills in business modeling and venture financing, a boon for innovative manufacturing companies¹¹. The U.S. Chamber of Commerce also gives out the CO-100 grant. It awards $25,000 to winners and $2,000 to other businesses to support innovation in smaller manufacturing firms¹².

Equity Financing and Crowdfunding in Ohio

In Ohio, when loans don't fit a company's needs, equity financing and crowdfunding offer help. These choices highlight the need for diverse financial planning. They open new doors for money.

Angel Investors

Angel investors are key to helping new businesses with money and advice. They often take 20% to 50% ownership in exchange for their investment¹⁴¹⁵¹⁶. Ohio has 55 angel investors supporting various sectors, including manufacturing. Investments range from $1 to $5,000,000¹⁵. This supports both new and growing businesses, boosting the local economy.

Venture Capital

Venture capital aims at high-growth companies. It comprises investments from firms, individuals, and pensions, usually wanting at least a 20% stake¹⁴¹⁶. In 2023, there was a record surge of over five million new business filings, showing a robust market for venture capital¹⁴. Venture capitalists in Ohio fund various industries, offering both capital and expertise¹⁵. This support adds financial and strategic value.

Equity Crowdfunding

Equity crowdfunding allows many small investors to fund companies for equity. Platforms like SeedInvest and CircleUp help make this possible¹⁴¹⁶. They take a fee of 3% to 8% for the service¹⁴. This approach lets smaller companies get significant funds from many investors. It promotes a community-backed business model. For companies 8 to 10 years old, going public through an IPO could be the next big step¹⁶.

Lease Financing for Equipment in Ohio

Leasing equipment gives Ohio manufacturing companies a big advantage. They can get the latest gear without the huge costs upfront. They can borrow from $50,000¹⁷

to more than $5,000,000 for important equipment. This saves a lot of money, keeping cash free for other uses.

Midland Equipment Finance helps by offering 100% financing. No down payment is needed¹⁷. Businesses can get up to $500,000 with just a simple form. Plus, the funding comes fast, within 24 hours.

Since 1989, Crest Capital has been a big name in equipment leasing. They cover all costs, even extras like delivery¹⁸. This reduces financial stress on companies. It lets them invest in other areas of their business.

Midland and Crest both aim for quick and easy financing. Crest gets you an answer in hours, not weeks like a bank¹⁸. They also offer payment plans that fit your business. This makes getting new equipment easier for Ohio companies.

Lease financing also comes with tax perks. Midland's Operating Leases let you write off monthly payments¹⁷. At Crest, you can get big tax deductions under Section 179 for buying equipment¹⁸.

Equipment leasing is a smart choice for manufacturers who need new technology. It’s financially smart and helps firms stay ahead in their market. This strategy supports growth by making it easier to update and improve operations.

Invoice Factoring and Trade Credit in Ohio

Invoice factoring and trade credit are key financial tools that help companies manage their cash flow better. Factoring lets a business sell its accounts receivable to a factor for immediate cash. Trade credit, offered by suppliers, allows businesses to buy now and pay later, improving cash flow.

How Invoice Factoring Works

Invoice factoring turns outstanding invoices into quick cash for businesses. This method sells accounts receivable to a factoring company at a discount. This deal gives businesses cash right away without needing certain financial agreements¹⁹. Companies, like those in Cleveland, use factoring to pay for daily operations and materials without taking on debt²⁰. This is a good alternative to bank loans, which can have high interest rates²⁰.

On average, factoring can advance up to 90% of an invoice's value. The amounts range from $100,000 to $15,000,000²¹. Companies can get this financing quickly, often within one to two days²¹. This is especially helpful for healthcare providers in Cleveland. They often wait on slow payments from insurance companies, affecting cash flow²⁰.

Benefits of Trade Credit

Trade credit gives manufacturing companies a simple way to improve their cash flow. It lets them buy materials and services on credit. This helps them manage daily expenses without paying right away. Businesses can use the cash they save for other important needs.

In Ohio, staffing agencies employ over 717,100 people. They can manage $240,000 in weekly payroll with 30-day payment terms¹⁹. This flexibility helps them meet payroll without affecting their cash on hand. Also, trade credit helps companies take on bigger projects and grow without being stopped by lack of funds¹⁹.

Invoice factoring and trade credit both offer flexible cash solutions that help businesses run smoothly and grow. They meet a company's immediate cash needs, making it easier to operate daily and plan for the future.

Non-Bank Financial Institutions in Ohio

Credit unions and Community Development Financial Institutions (CDFIs) offer tailored services. They focus on specific groups or industries. This makes them great for Ohio's smaller manufacturing businesses needing customized lending options.

Credit Unions

Credit union funding is key for Ohio's manufacturing firms. These unions are owned by their members. This means profits go back to members through lower loan costs.

The American Financial Group and the Federal Reserve Bank of Cleveland are big names in this area. They support various groups and sectors in Ohio. Ohio financial companies²².

Community Development Financial Institutions (CDFIs)

CDFI economic support targets underserved markets, like small manufacturing firms. They offer special products such as microloans. These are key for businesses that traditional banks might not help.

In Ohio, Forest City Realty Trust, Diamond Hill Capital Management, and Medical Mutual are major contributors. They provide crucial financial support and knowledge to their communities²²..

Government Contract Assistance Programs in Ohio

In Ohio, programs help manufacturing firms get big bucks through government deals. These include aid for Small Disadvantaged Business, Women-Owned, Veteran-Owned, and HUBZone firms. This boosts their chance to support small business contracting [SBA]²³.

To qualify, companies must be run by U.S. citizens who face economic or social challenges. Limits on personal wealth and income apply²⁴. For example, to be a Small Disadvantaged Business, an owner's wealth can't top $750,000. They must earn under $350,000 a year, with total assets under $6 million²⁴.

The WOSB program opens specific contracts to women in less-served sectors. Some are just for those facing financial hardships²⁴. Also, certain deals are just for Service-Disabled Veteran-Owned Small Businesses. HUBZone-certified firms get to price 10% lower in bids²⁴.

To get this help, signing up with SAM is a must. Keep up with updates on sites like Federal OSDBU and LinkedIn²⁴. Small firms should check out the Small Business Innovation and Technology Transfer programs for more federal contract chances [here]²³.

For Ohio's manufacturers, the government contract scene is ripe with prospects. Using GWACs for IT and IDIQ for varied services helps small firms boost efficiency and profit from federal deals²⁴.

Alternative Funding Sources in Ohio

Alternative funding sources provide dynamic finance options for Ohio's manufacturing sector. These options boost working capital and offer quick cash access. They also let repayments match up with how much money is coming in. This gives them a big plus over traditional funding methods.

Supply Chain Financing

Supply chain financing aims to improve working capital through the supply chain's financial needs. It lets businesses use the money stuck in receivables and payables, which boosts cash flow without adding debt. For businesses in rural areas, programs like the Business & Industry CARES Act Program from USDA offer loan guarantees. This helps them handle working capital needs during tough times, improving the local economy²⁵.

Merchant Cash Advances

Merchant cash advances provide a fast way to get money where businesses get cash upfront for a slice of future sales. This method suits those with changing revenues well, as it doesn't demand fixed monthly payments. Payments adjust based on sales, offering flexibility. Ohio's manufacturers can use these advances for immediate cash needs, avoiding traditional loan limits.

Revenue-Based Financing

Revenue-based financing's repayments are tied to how much money a company makes, avoiding giving up ownership like in traditional equity financing. Businesses pay back the investment with a set part of their monthly revenue until they've paid the agreed total. This fits high-growth businesses not wanting to dilute their equity. Ohio's small businesses, making up 99.6% of all state businesses and employing 2.2 million people⁷, stand to gain from such adaptable finance strategies, aiding in their sustained growth.

Conclusion

For Ohio's manufacturing companies, having a solid financial plan is a must. They need to pick funding options that match where they are at

Ohio's manufacturing history shows why smart financial planning matters. The state lost many jobs from 1969 to 2009 due to automation and global trade. But by 2016, the sector bounced back, employing many and becoming a national leader²⁶. This turnaround proves the value of grabbing new financial opportunities²⁷.

Investing in new skills and innovation can push Ohio's manufacturing further²⁸. It's important for decision-makers to focus on these growth drivers. They can use resources like the business financing opportunities document. It offers details on government help, loans, and equity options. Following a well-thought-out strategy, Ohio's manufacturers can prosper and strengthen the economy.