BUSINESS INCENTIVES – STATE OF OHIO
The state of Ohio offers numerous programs for businesses of all types ranging from finding a suitable location to low interest loans to tax incentive programs. Here are just a few. Additional information can be found on the state’s website at: https://cuyahogacounty.us/development
LOW-INTEREST LOANS AND GRANTS
Rapid Outreach Grant: These grant funds are for on- or off- site infrastructure improvements, including water, sewer, road and rail improvements. This fund is for companies primarily engaged in manufacturing, R&D, high technology, corporate headquarters, and distribution. Given the demand for limited grant funds, qualified projects must involve substantial job creation or retention, and all other public and private sources of financing must be considered before the availability of Rapid Outreach funding is determined.
166 Direct Loan: Direct loan financing is available to help finance manufacturing and other eligible facilities, with eligible uses for funding including new building construction, building acquisition, and acquisition of machinery and equipment. Amounts of financing are usually set at 30 percent of the project cost to a maximum of $1 million, subject to an increase by the Director of Development, with a minimum loan amount of $350,000. The rate is fixed (currently at 3 percent), with terms similar to those of commercial bank financing. Eligible projects must involve significant job creation or retention.
Ohio Enterprise Bond Fund: Revenue bond financing is available through this S&P AA- (double A-minus) rated fund, whereby proceeds from the sale of bonds is loaned to companies for fixed rate, long-term capital asset financing. Rates are fixed depend on the type of bond issued, while terms are between 7 to 10 years for equipment and 15 to 20 years for real estate. Up to $10 million in financing is available through this program.
Research & Development Investment Loan Fund: Direct loan financing of between $1 million and $25 million is available for projects primarily engaging in research and development activity. Rates are fixed (currently at 3 percent), with terms similar to those of commercial bank financing. Companies receive a dollar-for-dollar, nonrefundable Ohio commercial activity tax credit for all principal and interest payments during the year.
WORKFORCE DEVELOPMENT FUNDING
Pre-Employment Recruitment, Testing, and Screening Services: The Ohio Department of Job and Family Services can provide a variety of skills testing and employee recruitment services in partnership with local One-Stop centers serving every area of the state. These services are typically available to companies at no cost, while the company still maintains control over the final employee screening and hiring processes. Cost savings to employers can be up to $1,000 for each employee recruited and hired.
New and Incumbent Employee Training Grants: Training funds are available primarily for industrial and eligible administrative or office operations that are creating or retaining jobs. The Ohio Investment in Training Program can assist with up to 50 percent (and up to 75 percent in eligible areas) of training costs, Including management techniques, instructor fees, “train-the-trainer,” eligible travel costs, and other related training needs, while federal Workforce Investment Act funds managed by local One-Stop centers can assist with training expenses for existing employees and certain new hires.
Bureau of Worker’s Compensation Premium Discounts: Through a variety of employer-led safety initiatives, companies in Ohio can further reduce their annual worker’s compensation premiums. Discount programs include the Drug-Free Workplace and Safety Council.
STATE TAX INCENTIVES
Job Creation Tax Credit (JCTC): The Job Creation Tax Credit is a refundable tax credit to companies creating at least 25 new full-time jobs (within 3 years) in Ohio. The credit may also be available for certain high-wage industries creating 10 or more new full-time jobs within 3 years. The refundable tax credit is measured as a percentage of the state income tax withholdings for all new employees hired under the program, and is applied toward the company’s commercial activity tax liability. Should the amount of the credit exceed the company’s CAT liability for any given year, the difference is refunded. Approved projects generally range between a 25 and 55 percent credit for a period of 5 to 7 years. The business must apply for the credit before committing to the project.
Job Retention Tax Credit (JRTC): The Job Retention Tax Credit is a non-refundable tax credit to companies retaining at least 1,000 full-time jobs in Ohio. Companies must also commit to new fixed-asset investment of either $100 million, if the average wages of the retained jobs exceeds 400 percent of the federal minimum wage (equal to $20.60 per hour), or $200 million, if the average wages of the retained jobs does not exceed 400 percent of the federal minimum wage. The credit is measured as a percentage of the state income tax withholdings for all employees retained under the program. Approved projects generally range up to 75 percent for 10 years. The business must apply for the credit before committing to the project
Research and Development Investment Tax Credit: The R&D Investment Tax Credit is a non-refundable Ohio commercial activity tax credit for all investment in qualified research expenses incurred in Ohio by eligible “C” corporations. Qualified research expenses are based on Section 41 definitions in the U.S. Internal Revenue Code and include expenses for both in-house and contract research expenses. The amount of the credit is based on 7 percent of the amount of all qualified investment in a specific year. The credit can be carried forward for up to seven years.
Sales and Inventory Tax Exemptions: State and local sales taxes are exempted on certain types of purchases, including machinery and equipment used in the manufacturing process; material handling equipment used in the warehousing of inventory that is primarily (51 percent or greater) distributed to retail operations associated with the warehouse operator; and equipment used for research and development purposes.