YOUNGSTOWN, Ohio – The timing could have been better for Nate and Dani Wilson.
Having looked for about eight months at a 27-acre site on Logan Way in Hubbard, the proprietors of Woodland Cellars Winery and Meadery were already well into the process of securing financing to acquire the site.
They signed a contract and they closed on the property in April 2020, just weeks after the pandemic left many businesses shuttered.
“We were in too deep. We couldn’t quit at that point,” Dani Wilson says.
“The vision was there. The love for the property was already there,” Nate Wilson says in agreement. “We weren’t going to let [the pandemic] get in our way.”
The Wilsons are renovating the two-mansion property to open as an event center in the coming months. Already they are accepting bookings. They acknowledge they couldn’t have completed the $1.2 million project without the help of Valley Partners, which provided $450,000 in financing through its GrowBiz fund and the U.S. Economic Development Administration Cares loan fund.
While traditional lenders focus on business history, Valley Partners looks more at “vision, belief and investment in the community,” as well as economic impact, Nate says.
“It was pivotal. None of this would have happened without them,” Dani says.
Valley Partners, based in Liberty Township, is among community-based entities in the Mahoning and Shenango valleys that offer financing for businesses at more favorable rates than for-profit institutions, sometimes in partnership with those lenders or focused on meeting specific economic or community development objectives. These can include helping underserved communities, startup entrepreneurs and specified segments of the population.
“We have a few programs that are for those that cannot access traditional financing,” Teresa Miller says. Miller is executive director of Valley Partners.
Some of these programs have been in place for decades, while others were established recently, using funds from local American Rescue Plan allocations.
“If the traditional interest rates seem to be going higher, since we have the ability to offer lower rates, that’s when more businesses start to put their feelers out and seek alternative sourcing,” says Melissa Phillips, executive director of Warren Redevelopment and Planning, which has offered a revolving loan fund for several years.
“A lot of businesses don’t even know these programs exist, unfortunately,” says Diane Richardson, assistant director of the Lawrence County Economic Development Corp. in New Castle, Pa. “A lot of times bankers can’t fund 100% of a project and it’s usually advantageous to the business owner to have public funds that are willing to take a bit more risk to be in a subordinate position.”
Valley Partners administers an array of loan programs, Miller says. These include the Small Business Administration’s 504 program for larger projects, for loans of up to $5 million, and the state of Ohio 166 loan programs, which are geared to fixed assets for businesses in manufacturing and has a ceiling of up to $500,000. The organization also has revolving loan programs funded by EDA and U.S. Department of Agriculture, as well as local governments.
“All of them are close to prime [rate]. Some go below. Some go above,” Miller says. Some have “obvious restrictions” based on geographic location. She cites the city of Youngstown’s recently established $2 million revolving loan fund and a similar one the city of Warren is preparing to launch, both using American Rescue Plan funds.
LCEDC manages four revolving loan funds, many of which mirror the funds that the commonwealth of Pennsylvania offers, Richardson says. These include the Lawrence County Enterprise Zone Revolving Loan Fund, a separate county RLF, and a “very small” one funded through the U.S. Department of Agriculture’s rural micro-entrepreneurial assistance program, set aside for businesses with fewer than 10 full-time employees.
In addition, LCEDC is one of 19 organizations in Pennsylvania allocated revolving loan funding last year through the federal State Small Business Credit Initiative, Richardson says. The organization has broken it into two RLFs, one that will provide loans ranging from $5,000 to $100,000 and another targeting socially and economically disadvantaged individuals that offers loans of between $10,000 and $250,000.
Unlike loan funds she has traditionally worked with, which focus on manufacturing, distribution and headquarters projects, the State Small Business Credit Initiative funds are “available to any legal Pennsylvania business” and can be used to support companies in sectors such as retail and services.
Other organizations in Ohio and Pennsylvania approved for the SSBCI funds include Valley Partners, which will use them for a revolving loan fund to target underserved populations and geographic areas, Miller says.
The Columbiana County Port Authority operates a revolving loan fund through the county community improvement corporation, Brittany Smith says. Smith is the port authority assistant executive director. The program, which is funded through the Ohio Department of Development, recently lent much of its funding. About $50,000 remains available.
The port authority recently launched its own revolving loan program and helped a local restaurant with a $40,000 loan.
“It’s very important to have these opportunities for businesses,” Smith says. “A lot of the businesses that we deal with are very small and their financial capabilities are very limited. But, they’re important to the economic success of Columbiana County.”
The Community Action Agency of Columbiana County also has a micro-enterprise loan program that the port authority partners with.
The micro-enterprise fund isn’t sector specific, says Julie Needs, executive director of the Sustainable Opportunity Development Center in Salem.
Needs has used it to help businesses such as downtown retailers and restaurants. It’s beneficial when a business wants to buy a piece of equipment too small for a bank to finance, she says.
Penn-Northwest Development Corp. provides direct lending through the Mercer County Industrial Revolving Loan Fund and is a co-lender in the Shenango Valley Enterprise Zone Fund, says the executive director of Penn-Northwest, Rod Wilt.
“Those are two local revolving loan funds that look at real estate, machinery and equipment,” Wilt says.
Penn-Northwest also is a co-investor with Pennsylvania’s Ben Franklin Technology Fund in the new Mercer County Innovation Fund, which provides financing to technology-based startups and for business expansions that involve technology upgrades.
In additional, the Pennsylvania Industrial Development Authority provides low-interest loans for real estate and machinery and equipment, Wilt says.
The rule of thumb, he says, is that a job is to be created for each $75,000 lent.
The Sharon Industrial Development Authority serves business in that city through its industrial loan fund. These include a $100,000 loan to the Area Community Theatre of Sharpsville, which bought the former Sacred Heart Catholic Church in 2021, to serve as its new home, and nearly $422,000 to support two projects by JCL Development.
Several Ohio loan programs that target underserved populations in the region are available though the Minority Business Assistance Center housed at the Youngstown Business Incubator, says Stephanie Gilchrist, MBAC regional director.
These include a micro-loan program that lends up to $45,000 at no interest for five years, the Women Business Enterprise Loan Program that certified borrowers can access for up to $500,000 at 1.5% interest, and a fund for minority-owned businesses that offers loans of up to $1.5 million at 3% interest but requires the borrower to have 25% of the cost of the project in equity, Gilchrist says. The state is working on a new revolving loan fund program that will be rolled out in the coming months, she adds.
These types of loan programs can be “lifesavers,” Gilchrist says. She can’t estimate how many clients have been helped by the programs, which have been instrumental in hiring employees or to scale up their operations
“Without these loans, a lot of our clients would not be able to make it or see their visions and their dreams come true, especially as underserved populations,” she says.
Pictured at top: Woodland Cellars owners Nate and Dani Wilson in Logan Way mansion they are repurposing as an event center.