CPA & Business Advisory Blog

Alternative Financing Sources for Business and Real Estate Owners

As business and real estate owners and officers navigate financing avenues to help support growth or expansion of their business, traditional lending isn’t the only option.  On Thursday May 9th, 2013 I attended the Alternative Financing Forum sponsored by PNC and Buckley King.  The forum was driven by three separate stake-holders in the greater Cleveland marketplace, Kristi Eberhardt, a Director with PNC, Christine Nelson, VP with Team NEO and Deb Janik, Sr. VP with the Greater Cleveland Partnership.  Each panelist walked the audience through certain types of alternative financing sources available to business and real estate owners and officers looking to expand, grow and possibly recapitalize their business. 

The program highlighted several alternative financing sources. The following list is a subset of the offerings available:

  • Tax-exempt bonds are debt issued by or on behalf of a local government to provide low interest debt financing for qualifying projects used by a private user.  The interest income paid to the bond holder is free from federal and sometimes local income tax, which results in reduced financing costs (to the borrower).  These permanent financing sources generally offer lower long term rates than conventional lending (read: 25-30% lower), are targeted towards project sizes of $2.0MM+, and have a limit on the depreciation taken for tax purposes on the financed assets.
  • SBA 504 loans can be a great source of financing when purchasing real estate or long-term fixed equipment.  Roughly 90% of the project costs can be financed, with 50% financed through a traditional lender and 40% being financed via the SBA, through a Certified Development Corp with favorable long term fixed rates.
  • Job Creation Tax Credit, an economic development opportunity through the state of Ohio, available to companies creating 10 new jobs within three years and having minimum annual payroll of $660,000.  The credit is applied against the Ohio Commercial Activity Tax liability.
  • Ohio Enterprise Bond Fund is a program with loans ranging in size from $2-10 million to finance up to 90% of industrial, commercial, distribution and research projects.  The project is required to create or retain one job for each $100,000 of loaned money within a three-year period.  Priority is given to higher-wage and job creation projects.

The list above is a small subset of twenty alternative financing sources discussed and available to qualifying businesses; additional options and facilities are available at the county (Cuyahoga) and City of Cleveland level as well. 

For more information on our Real Estate & Construction Services, contact Jon Shoop by leaving a comment below or by calling 440-449-6800.



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