Community Banks and small business tend to give government a hard time for often making it more difficult for small businesses to be profitable and grow. So when a government program comes along that effectively encourages small business growth, it is worth noting.
In this case, the State of Ohio has developed several lending programs after receiving more than $55 million from the US Treasury for the State Small Business Credit Initiative (SSBCI). This initiative was designed to encourage lending to small businesses. The two programs mentioned above are the Collateral Enhancement Program (CEP) and Ohio Capital Access Program (OCAP). Both programs help mitigate risk for Banks who are working to put together loan packages for small businesses that may be creditworthy but lack a traditional down payment or do not have adequate collateral. Typically government programs (i.e. the Small Business Administration) have funds available but the requirements and/or underwriting are often prohibitive and difficult to navigate. These state programs, on the other hand, are easy for banks to use and the State wants these funds to be distributed to small businesses that need them.
Check with your local community bank to see if they participate in these programs or visit the State website to see a list of participating banks. The website also lists eligibility requirements and explains more about program details.
As of 11/1/2012 the State has awarded $3.452 million of the $33 million available in the program. Your community bank’s small business lender should be knowledgeable about these programs and can help you explore your options. This is one instance where community banks, small business, and state government can work together to create jobs and improve communities.