Stark County Revolving Loan Fund, explained: How it works and who can apply for a loan
CANTON ‒ Stark County officials recently established a new loan program designed to help businesses grow.
The Stark County Port Authority voted earlier this month to create a countywide revolving loan fund. Businesses in Stark County can apply for loans of a minimum of $25,000 to help with the purchase of equipment and machinery, infrastructure, real estate and other purchases aimed at increasing productivity or adding and retaining jobs.
So what is a revolving loan fund? How does it work? What requirements do businesses need to meet to apply for a loan? Will the Hall of Fame Village be getting a loan? Here's what to know.
What is a revolving loan fund?
A revolving loan fund is a pool of money that replenishes itself by using repayments from old loans to issue new ones. It is typically geared toward small businesses, but some revolving loan funds focus on specific areas, such as environmental clean-up or the development of minority-owned businesses, according to the Council of Development Finance Agencies.
"As loans are repaid, those repayments we can then cycle back out into other loans," said Mike Naso, economic development services coordinator at the Stark Economic Development Board. "The hope is that we can assist local businesses."
The loans cannot be used on working capital, which includes expenses like wages, overhead and rent.
"We're focused on businesses that are looking to potentially increase their output, increase their operation, increase their productivity," Naso said.
Who can apply for a loan?
Stark County businesses can apply for a loan through the program. Projects must be located in the county, and applicants will be required to provide 10% equity based on the total cost of the project.
Applicants must pay a non-refundable application fee of $250 and provide current and three previous years' worth of financial statements. This includes a balance sheet, income statement and cash flow statement. They cannot be in receivership or bankruptcy and must be current on county, city, state and federal taxes.
Businesses must also be registered with the secretary of state to conduct business in Ohio.
Other conditions include:
Must be up to date on any licenses needed to operate their business
Submit articles of incorporation and organization
Must have proof of general liability insurance and workers compensation insurance
Is the Hall of Fame Village getting a loan?
The Hall of Fame Resort and Entertainment Co. is expected to receive a $5 million loan through the revolving loan fund for infrastructure improvements as part of phase two of development at the Hall of Fame Village. The Stark Port Authority approved the loan on Monday, and the Stark County commissioners appropriated $5 million to the fund during the board's meeting on Wednesday.
It is a 6%, interest-only term loan. Mike Naso, economic development services coordinator at the Stark Economic Development Board, said the company will make quarterly payments of $75,000 on the loan, with the first payment coming Sept. 30 at a prorated rate.
The company's loan application says its total debt as of March 31 was about $104 million. Its annual sales were roughly $10.8 million for the period ending Dec. 31, 2021.
According to the current loan agreement, the Hall of Fame Resort & Entertainment Co. would default on a payment if it failed to make it within 10 days of its due date or failed to complete the phase two infrastructure improvements at the Hall of Fame Village by Dec. 31, 2024.
It is not the only loan the company is expected to receive for the project. Canton City Council voted earlier this month to loan $5 million for infrastructure improvements at the Hall of Fame Village providing the county also loan $5 million for that purpose. In addition, the company has already gotten a loan of $5 million from the Stark County Community Redevelopment Fund, which is funded by the George H. Deuble, Hoover, Stark Community and Timken foundations.
Phase two of the Hall of Fame Village development includes the on-campus hotel, waterpark, the Constellation Center for Excellence, Center for Performance, Play-Action Plaza and Fan Engagement Zone.
Stark officials have said the loan repayments coming from the Hall of Fame Village project will help fund the revolving loan program, allowing it to be utilized by other businesses in Stark County.
Do other communities have anything similar?
Naso said several of Stark's neighboring counties offer revolving loan funds, including Summit and Wayne. The Ohio Mid-Eastern Government Association Revolving Loan Fund includes Tuscarawas and Carroll counties, and the Valley Economic Development Partners Revolving Loan Fund serves Mahoning and Trumbull county businesses.
The cities of Ravenna and Kent have revolving loan funds, too.
"There's a number of different revolving loan funds in Northeast Ohio," he said.
Stark's revolving loan fund is overseen by the Stark County Port Authority's Board of Directors. The board is responsible for reviewing and approving loan applications.
What happens if a business defaults on a loan?
Any business that fails to make a payment will receive notices at 30 days and 45 days after the payment was due.
After 60 days, the port authority will evaluate the business's financial status and take one of the following actions:
restructure the payment schedule in a way that is agreed upon by both parties
provide forbearance, or an extension of the term of the loan
inform the borrower they are in default and liquidate any collateral
What is the application process?
Stark County businesses can apply for loans with a fixed interest rate no lower than 4% or 75% of the prime rate. These loans will be amortized over seven years. The port authority's board of directors is able to negotiate terms and conditions for repayment.
The Stark County Port Authority Board of Directors and Stark County commissioners will receive updates regarding any outstanding loans at the end of each quarter.
To apply for a loan or learn more information, contact the Stark County Port Authority at (330) 453-5900.
Reach Paige at 330-580-8577 or pmbennett@gannett.com, or on Twitter at @paigembenn.
This article originally appeared on The Repository: Stark County Revolving Loan Fund aims to help small businesses
