If so, the Cuyahoga County New Product Development Loan Program, administered by MAGNET, has low interest loan funding available to help small businesses or entrepreneurs bring their ideas to reality.

A funding round is now open. Completed applications will be accepted until Tuesday, July 6, 2010.

The application process has recently changed.  Please visit http://www.magnetwork.org/programs/county_loan.htm for more specific program information and instructions on how to submit an application.

Funding is available to small businesses or entrepreneurs with prior year sales of less than $50 million who have an idea to develop a new product that will be manufactured in Cuyahoga County for at least 7 years.

The application process is competitive.  Applicants will have their submissions reviewed and approved by a committee consisting of local business leaders, venture capitalist, designers, and entrepreneurs.   Loans are made in phased increments ranging from $15,000 to $60,000 depending upon how much development has already been completed and what remains to be done.  Funds can be used for activities such as market research, patent services, industrial design, engineering and prototyping efforts.

The loans are 10 year loans.  They are interest and payment free for the first three years after disbursement.  The loan balance is then amortized over the remaining seven years of the loan (at an interest rate of 3.5%), during which time monthly payments of principal and interest are due.

Full details of the program are available at http://www.magnetwork.org/programs/county_loan.htm.  If you have further questions, please contact Barbara Paul at 216-432-5322 or barbara.paul@magnetwork.org.

Marv is a serial entrepreneur with a history of launching highly successful technology ventures. He is perhaps best known as being the Founder, CEO and CTO of Noteworthy Medical Systems, the award winning electronic health record company that soared to $50million in revenues in just five years. Marv received his Ph.D in Computing and Information Sciences from Case Western Reserve University where he serves as an Adjunct Professor of Computer Sciences.

Welcome aboard Marv. Now roll up your sleeves and help us build a couple dozen more $50million companies.

Jim Cossler
C.E.O & Chief Evangelist
Youngstown Business Incubator

Ohio Third Frontier, a program designed to expand our state’s robust technology sector, has generated a 9:1 return on its investments, leveraging resources and creating opportunities for Ohioans through innovation across our state. Today, the Ohio Department of Development announced the release of two competitive requests for proposals (RFP) for the program’s 2010 fiscal year.

“Through Ohio Third Frontier, we have invested more than $374 million in the biomedical cluster, a high impact industry across our state,” said Lisa Patt-McDaniel, Director of the Ohio Department of Development. “Ohio Third Frontier’s strategic focus and investments will continue to strengthen and create new companies, commercialize new technologies, and create good jobs for Ohioans in both in the biomedical imaging and other sectors.”

Medical Imaging and Biomedical areas such as cardiovascular, regenerative medicine, and orthopedics, have demonstrated a compelling capacity for growth in Ohio. Recognizing that potential, Ohio Third Frontier has tailored its programming to become an investment partner in these industries, catalyzing the significant potential these sectors represent for Ohioans.

Designed in 2002 to build world-class research programs, nurture early-stage companies, and foster technology development that makes existing industries more productive, Ohio Third Frontier creates opportunity through innovation. The National Governor’s Association and Pew Center for the States described Ohio Third Frontier as “a comprehensive, professionally run effort to build world-class research capacity, promote interaction between research and industry, and commercialize research and development.”

Representatives from Ohio Third Frontier will conduct a bidder’s conference on January 5, 2010 at TechColumbus. Letters of intent are due to the Ohio Department of Development by January 25, 2010.  Formal proposals will be accepted until March 1, 2010 at 2 p.m., with program awards to be made in May 2010.

In keeping with Ohio Third Frontier’s commitment to transparency, proposals will be evaluated independently and externally, then reviewed by the Ohio Third Frontier Commission before final approval by the State Controlling Board.

Complete RFP materials are available at: www.thirdfrontier.com.  All information and guidance required to submit a successful proposal can be obtained directly from the Ohio Department of Development.

“Small businesses are engines of job creation and innovation, and we need their ingenuity and entrepreneurial spirit to drive a clean energy economy,” said Secretary Chu. “By helping small businesses bring clean technologies to market, we can create jobs, reduce our dependence on foreign oil, and reduce carbon pollution.”

DOE’s SBIR/STTR programs target U.S. companies with fewer than 500 employees. Small businesses with strong research capabilities in science or engineering are encouraged to apply. Applications are currently being accepted for topic areas related to improving energy efficiency including:

• Advanced building air conditioning and refrigeration, thermal load shifting, and cool roofs
• Water usage in electric power generation and industrial processes
• Power plant cooling
• Advanced gas turbines and materials
• Sensors, controls, and wireless networks
• Advanced water power technology development
• Smart controllers for smart grid applications
• Advanced solar technologies
• Advanced industrial technologies development
• Advanced manufacturing processes

The deadline for submission of applications is September 4, 2009, at 8:00 p.m. EST.  Approximately $8.5 million is expected to be available for new Phase I awards.  Successful applicants may receive up to $150,000 for a Phase I grant for a period of six months to demonstrate the feasibility of the ideas that appear to have commercial potential.

Read more information about DOE’s SBIR and STTR programs.

NEOinc would add to the list to include the Innovation Loan Fund at Lorain County Community College (grants up to 25K, loans up to 100K), and the Cuyahoga County New Product Development Fund, administered by MAGNET (loans up to 60K).

Without further ado – on to the incentives.

Economic Incentives for the High Tech Industry

City of Cleveland

Technology Business Grant Program

This program was designed by the City of Cleveland to attract new business to the City while helping reinforce the City’s “brain gain.” Grant assistance can be applied to both new and existing technology businesses with strong prospects of growth and commercialization of proprietary technologies. Approved companies will receive up to $50,000 per year for three years, based on 50% of new City of Cleveland income taxes generated.

Economic Development Loan Program

The Economic Development Loan Program is designed to help companies from across all industries. This program offers long-term, fixed-rate financing at 4.0% interest. Loans for this program range from $35,000 to $500,000 and cannot exceed 40% of the total project’s cost. Terms are typically 5-7 years on equipment and to up 15 years on land and buildings. The City will take a subordinated collateral position to a private lender.

Vacant Property Initiative Fund

For technology-based companies looking to buy a building for office space or to build their new headquarters or technology showcase space, the Vacant Property Initiative Fund may help secure the facility you need. These loans are designed to overcome barriers to the re-use of abandoned, idled or underutilized commercial properties. Loans may be used for property acquisition, environment site assessments, site clearance and demolition and new construction. The funding is up to 45.0% forgivable. The loans have a 6.0% fixed interest rate and are made for a maximum of one-year.

The City of Cleveland has various other economic incentives available for business and commercial development, please contact us at the LNE Group to discuss in more detail.

Cuyahoga County

NorthCoast Opportunities Technology Fund

The NCO Tech Fund program targets technology companies that are excellent candidates for future venture capital investment and possess high growth job creation potential. Approved companies will receive a payment-deferred, low interest loan to complete a specific initiative or project that is expected to make the company significantly more attractive to pre-seed investors. Evaluation and selection will be performed by the County in collaboration with the State of Ohio funded TechLift entrepreneurial signature program. Funding rounds will occur on a bi-monthly basis.

Key Business Requirements

• Loans can be for $25K- $125K, with typical loans in the $50-75K range
• Interest rate of 5%
• Payments deferred for five years or until:
  Significant financing event (greater than $1.5 million)
  Sale of company or company assets
  Failure to comply with terms of agreement (i.e. leaving Cuyahoga County)
• Loan proceeds must be used for a specific project or initiative that will bring the company closer to achieving pre-seed funding.
• Loan is secured by the personal property and assets of company

Grow Cuyahoga Fund

The Grow Cuyahoga County Fund is a regional economic development fund operated in conjunction with the National Development Council which is a licensed SBA 7(a) lender. The National Development Council (NDC) is one of the nation’s oldest non-profit organizations for community and economic development. Through its Grow America Fund subsidiary, NDC provides SBA-guaranteed 7(a) loans to small businesses in partnership with client communities throughout the country.

The Grow Cuyahoga County Fund can make loans ranging from $100,000 to $1 million. The loans will generally be at rates of prime minus 2% to prime plus 2%, for terms up to 25 years depending on the proposed use of funds. Loan proceeds may be used for any legitimate business purpose, including working capital, machinery and equipment, acquisition of land and building, construction, renovations and tenant improvements. The Grow Cuyahoga County Fund does not provide venture capital and cannot provide funds for research and development or to satisfy equity or near-equity needs.

Economic Development Loan Program

The Economic Development Loan Fund provides businesses with financial assistance to support the retention and creation of jobs for County residents. The fund provides long term, fixed-rate financing at interest rates lower than conventional financing. Interest rate is typically four and a quarter percent (4.25%). The fund is intended to fill a financing gap beyond the amount of private participation and equity investment that can be raised. Loans generally range from a minimum of $35,000 to a maximum of $350,000, up to forty percent (40.00%) of total project cost. Loan terms are up to seven (7) years on equipment and up to fifteen (15) years on land and building. Loans can be used to finance the acquisition of land, buildings, machinery and equipment as well as for new construction, renovation, expansion and/or conversion of facilities. Loans cannot be used to refinance debt, purchase inventory, pay other non-capital costs or on speculative projects. The County will take a subordinated collateral position provided there is adequate collateral available as security, up to a ninety percent (90.00%) loan to value ratio.

Key Business Requirements

• Businesses are required to create one new, full time, permanent job for every $35,000 loaned within three years of loan closing.
• Businesses must provide a minimum of ten percent (10.00%) equity. The business owner or majority stockholder must provide a personal guarantee for the loan amount.
• A majority or fifty-one percent (51.00%) of the jobs created must be made available to low and moderate income persons as defined by the federal government.
• The business must execute Workforce Cooperation Agreement with the County that designates as first source of referral for mutually agreed positions at the company.
• Business must demonstrate the ability to repay the loan as well as have adequate collateral and acceptable credit.
• When loan funds are used for construction, federal prevailing wage rates must be paid and a departmental environmental review must be conducted.
• The business owner or majority stockholder must provide a personal guaranty in the amount of the loan. Additionally, key man insurance and hazard of business insurance is required in the amount of the loan with Cuyahoga County Board of County Commissioners as the loss payee

Enterprise Zone Tax Incentives

A business enterprise located within a Cuyahoga County Enterprise Zone is eligible for negotiated tax incentives for new investment. Currently there are twenty-six (26) enterprise zones designated in Cuyahoga County municipalities which include: Bedford, Bedford Heights, Berea, Brook Park, Cuyahoga Heights, Euclid, Garfield Heights, Glenwillow, Highland Heights, Highland Hills, Maple Heights, Mayfield Heights, Newburgh Heights, North Olmsted, North Royalton, Oakwood, Olmsted Falls, Parma, Richmond Heights, Shaker Heights, Solon, South Euclid, Strongsville, Valley View, Walton Hills and Westlake.

Key Business Requirements

• Businesses must apply directly to the municipality which is the site of the new investment. Local governments can grant exemptions of up to seventy five percent (75%) on eligible new investments. The term of these incentives can be for up to ten (10) years. Once an agreement is negotiated between the company and the municipality, the agreement must be approved by the Board of Cuyahoga County Commissioners. The project cannot begin prior to the Commissioners’ approval.
• The companies are required to negotiate and execute a Workforce Cooperation Agreement with the County, which designates the County as the first source of referral for mutually agreed entry-level positions at the company.
• All intra-state relocations require a relocation waiver issued by the Ohio Department of Development. A letter from the mayor of the exited community is required on intra-county relocations.
• Fees include a one-time application fee of $750.00 payable to the Ohio Department of Development. There is also an annual monitoring fee charged by the municipality and split with the County. This fee is equal to one percent (1%) of the taxes exempted, minimum $500 and not to exceed $2,500 per year for the life of the agreement.

For more information on the Cuyahoga County economic incentives please feel welcome to contact me at 216.781.9000 or at mdealoia@lnegroup.com.

State of Ohio

Job Creation Tax Credit

The Job Creation Tax Credit allows companies that are creating at least 25 new full-time jobs that are paying at least 150% of federal minimum wage to apply for state income tax credits. Certain project that create 10 or more full-time jobs and pay more than 400% of the federal minimum wage may also be eligible for the tax credits. The credit is calculated as a percentage of state income tax revenue withheld by the business for new employees. The credit also allows a municipality to grant a credit against its income tax to business that receives it from the state.

Technology Investment Tax Credit Program

This credit program offers a variety of benefits to Ohio taxpayers who invest in small, research and development or tech-based firms. Through this innovative program, Ohio investors may reduce their state taxes by 25.0% (and in some cases 30.0%) of the amount they invest in qualified, technology-based Ohio companies. Both the companies and the investor’s must meet several requirements specified by Ohio law in order to gain access to this program.

Ohio Research & Development Investment Tax Credit

The Ohio Research & Development Investment Tax Credit provides a non-refundable tax credit against the corporate franchise tax and is designed to encourage Ohio-based companies to invest in increased research and development activities.

Research & Development Sales Tax Exemption

A unique way for a company to support its research and development activities is the Research & Development Sales Tax Exemption which allows for an exemption from the usual state and county sales tax for companies that purchase equipment for research and development activities. This allows Ohio-based companies to enjoy significant tax savings while undertaking research and development activities.

Ohio Innovation Loan Fund

The Innovation Ohio Loan Fund (“IOF”) was created to assist existing Ohio companies develop next generation products and services within certain “Targeted Industry Sectors” by financing the acquisition, construction and related costs of technology, facilities and equipment. The IOF provide competitive financing terms on loans to finance projects that will positively impact Ohio by creating high-value jobs, increased tax revenues and improve the welfare of the State.

The IOF is intended to supply capital to Ohio companies having difficulty securing funds from conventional sources due to technical and commercial risk factors associated with the development of a new product or service. The IOF can finance up to75.0% of a project’s allowable costs to a maximum of $3.0 million and a minimum of $500,000.

Key Business Requirements

The IOF will target industry sectors involving the production or use of:

• Advanced Materials
• Instruments, Controls & Electronics (“ICE”)
• Power & Propulsion
• Biosciences
• Information Technology

The IOF is intended to support the capital needs of established Ohio companies that have:

• A recent history of positive cash flow
• A minimum of three years of operating history
• Attracted or are likely to attract additional third party capital to the project

The Innovation Fund advances the strategy to grow our own businesses and jobs in the region.  “In this our seventh round of funding, we continued to be impressed with depth and quality of entrepreneurial ideas that are emerging from our region,” noted Lorain County Community College President Dr. Roy A. Church.  “Including this round, the Fund has invested more than $2 million in 30 companies located in NE Ohio”

The Fund is seeding the development of new technology-based industries in Northeast Ohio that represent the jobs of the future.  The fund supports Ohio’s overall strategy for technology-based economic development as evidenced by the Ohio Department of Development strategic plan.  These Innovation Fund awards help to fill the funding need for businesses that are at the earliest stage of development, the difficult point in a business’s growth before they are mature enough to attract angel investors and venture capitalists.

There are two types of awards within the Innovation Fund: the first is a grant of up to $25,000 to help validate the technology; and the second is a pre-seed grant of up to $100,000, which requires a one-to-one match, and is designed to help validate the business concept.

The six Innovation Fund Awards announced today are:

TheraVasc - Cleveland, Ohio – $100,000

• TheraVasc is developing a business based on new novel therapies for peripheral artery disease (PAD),a chronic disorder associated with reduced blood flow to the extremities that affects millions of people across the world.

Absorbent Materials Co. – Wooster, Ohio – $100,000

• Absorbent Materials is developing a new class of patent-protected, organosilica glass polymers called OSORB – which instantaneously swells to greater than three times its dry volume in non-polar solvents. As a result, it shows great promise as the material to clean hydrocarbon-contaminated groundwater and also to remediate toxic waste.

BizVeo – Youngstown, Ohio – $25,000

• BizVeo is developing a web based education and training tool that utilizes streaming video accompanied with competency based testing.

Rapid Charge Technologies - Cleveland, Ohio – $25,000

• Rapid Charge Technologies will further develop and commercialize rapid charging technology for lead acid batteries that is based on patented technology created and tested at the University of Georgia Technology. This technology holds the promise of allowing lead acid batteries to be charged in minutes, not hours, and dramatically extend battery life.

Citizen Groove – Cleveland, Ohio – $25,000

• Citizen Groove is developing an innovative, patent-pending, digital music organization system to first enhance all artists networking capabilities, second, to create an easy-to-use music discovery engine for music listeners, and third, to enable the aggregation and supply of critical music market data to industry professionals.

Sooth, Inc. – Beachwood, Ohio – $25,000

• Sooth isdeveloping technology that automates computer network management to provide a less costly, more stable and secure network.

About the LCCC Foundation Innovation Fund

Contributions to the Innovation Fund are fully tax deductible as a result of a landmark ruling by the IRS.  Realizing the potential risks to a foundation’s tax-exempt status for supporting incubator activities, the LCCC Foundation submitted a special request to the IRS seeking permission to accept charitable contributions that would be used for the purposes of the Innovation Fund.  In January of 2006, the LCCC Foundation received a positive ruling, a groundbreaking decision applicable only to the LCCC Foundation and is the only one of its kind in the nation.

To date the Innovation Fund has received generous support from a variety of partners and the local community.  In 2007, the State of Ohio made a major investment of $400,000 through the Ohio Third Frontier Entrepreneurial Support Program.  Additional investments were made by the State: in 2008 in the amount of $500,000; in 2009 in the amount of $1.5 million.  The Third Frontier Project is the state’s largest-ever commitment to expanding Ohio’s high-tech research capabilities and promoting innovation and company formation that will create high-paying jobs for generations to come.

The Innovation Fund focuses on technology opportunities in Ohio’s five high growth industries.  It is a regional fund, providing support across Northeast Ohio’s 21 counties to help great technology ideas develop into viable businesses and thus create jobs in the region.

Recipients of Innovation Fund awards agree to provide an educational experience in entrepreneurship for a student – allowing the student to walk side by side with the entrepreneur without taking on the risk.

The application process for the Innovation Fund is completely web-based.  Applicants are able to submit an application through the fund’s website.  Upon submission, GLIDE and its regional partners representing a network of industry experts, entrepreneurs and investors employ a thorough due diligence process to assess both the technology and the business potential.

For more information about the LCCC Foundation Innovation Fund or to apply, please visit www.lorainccc.edu/if

1. Accept that your revenue side will probably not be correct, but the cost side needs to be appropriate
2. Don’t assume a big revenue ramp to be supportable
3. Define the “next stage” of your business, what it will cost to get there and what it will look like
4. Be up front with investors that this is your first time and you are looking for feedback
5. Don’t be afraid to ask for help

Good Luck!

The Global Cardiovascular Innovation Center in Cleveland is looking for young companies that need financial and developmental help to take their heart-related products to market.

The GCIC, as it is commonly known, is a consortium of research and medical institutions, economic development organizations and companies headed by the Cleveland Clinic. The center is aiming to help launch medical devices, drugs, therapies, equipment and other cardiovascular products that can treat patients’ hearts.

It’s also aiming to create jobs and is planning a building at the Clinic’s main campus on the East Side of Cleveland. Many of the companies that receive grants from the center are expected to take up at least temporary residence at the building.

Already, the GCIC has made nearly $12 million-worth of grants to 35 companies for 40 projects, said Tom Sudow, director of business development for the center.

The largest grant was for $1 million and the smallest, $25,000, Sudow said. But grants average around $300,000.

Though most of its grants go to Ohio-based companies — and companies must have a presence in the state to qualify for grants — the GCIC has granted money to companies in Israel and Switzerland, as well as in North Carolina, Massachusetts and Maryland, Sudow said.

The next grant round starts on May 8 when the GCIC expects to post a request for proposals at its Web site. Interested companies can find information and apply online. The proposals are due by July 2.

The GCIC was started in late 2006 with a $60 million grant (pdf) from Ohio’s Third Frontier project.

We saw 300 companies last year [and funded two] and the vast majority should never have been looking for venture capital. Our advice is just go and start the company. Go and sell this. If you have something people will buy, they will partner with you and you can build a business.

We hear these comments, in one form or another, over and over from investors of all types.  Too many entrepreneurs get overly focused on the pursuit of funding and forget that many great companies were started on a shoestring, bootstrapped through early sales, then became attractive to outside investors with a proven product and market.

Something to think about.

MAGNET administers the New Product Development and Entrepreneurship Program, Product Innovation Loan Fund on behalf of the Cuyahoga County Department of Development.  In the last four years, the fund has provided over $3.5 million for new product development in NE Ohio and $500,000 in additional funds are now available.  Results of the program have been outstanding with loan recipients attracting over $18 million in additional investment, generating almost $9 million in revenue through the sales of over 330,000 product units, and creating 124 jobs.

The process is competitive.  Applicants will have their submissions reviewed and approved by a committee consisting of local business leaders, venture capitalists, designers, entrepreneurs and representatives from Cuyahoga County.  Applications for the current funding round are being accepted with a submission deadline of NOON EDT on Friday, May 15, 2009.  Loans of up to $115,000 can be made in phased increments ranging from $15,000 to $60,000 depending upon how much development has already been completed and what remains to be done.

The loans have an interest rate of 3.5%.  There are no interest or principal payments for the first three years after disbursement.  Small companies of less than $50 million in sales as well as entrepreneurs can use this money to fund their product development process for such activities as market research, patent services, industrial design, engineering and prototyping efforts.  Software development companies are also eligible.

Full details of the program along with application forms are available at http://www.magnetwork.org/programs/cuyahoga-loan-fund.htm.

If you have further questions you can contact Barbara Paul by phone at 216-432-5322, or by email at barbara.paul@magnetwork.org

PS  If you don’t need funding yourself we’d appreciate it if you help publicize this opportunity through your network. Thanks.