Jun 22, 2023
The Ohio Regional 166 Direct Loan Program is a state-funded loan pool that provides low-interest loan financing assistance to businesses for the allowable costs of eligible projects within the state to promote economic development, business expansion, and job creation.
- The program may finance up to 40% of an eligible project, with loans up to $1,000,000
- A minimum of 10% equity contribution is required from the borrower in the eligible project, however, a greater equity contribution may be required based on due diligence. The remaining eligible project shall be funded by the borrower either directly or indirectly through third-party investors and/or private lenders.
- Interest rates shall be fixed at or below local market rates at the time the loan is presented to Development for approval.
How can I use the loan?
- Land and/or building purchases – if the project involves the purchase of an existing building, the business must occupy at least 51 percent of the premises;
- Machinery & equipment purchases;
- Building construction and/or renovation costs – in case of construction, the business must occupy at least 60 percent of the premises;
- Long-term leasehold improvements;
- Ongoing fixed asset purchases; and
- Capitalizable costs directly related to a fixed-asset purchase.
Are there any associated costs?
Yes. There is a commitment fee equal to 1.25% % of the loan amount capped at $12,500 due to proceed with the loan closing and loan documentation process. Also, the annual servicing fee which is equal to 0.25% of the outstanding principal amount of the loan is pro-rated and payable monthly
Who can apply?
This program has been leveraged primarily by the following types of for-profit businesses:
- Manufacturing & Distribution
- Research & Development
- Owner-occupied commercial real estate
Applications are accepted by the Program Administrators who perform preliminary investigations into the financing needs and the business seeking funding. Locally, the Toledo-Lucas County Port Authority serves as a Program Administrator. To inquire about the program, connect with Jason Bartschy, Director of Financing Programs at email@example.com
For a complete list of program administrators, please visit the Ohio Department of Development website here.
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Jan 17, 2023
In September of last year, Ohio Governor, Mike DeWine, announced training reimbursement grants being made available to ApprenticeOhio sponsors and employers as a result of a federal Building State Capacity to Expand Apprenticeship through Innovation grant that Ohio Department of Job and Family Services (ODJFS) received in 2020.
Sponsors and employers can apply for the grants at Apprentice.Ohio.gov, receiving reimbursement of up to $2,500 per apprentice for up to 10 apprentices to help cover the costs of training and tool allowances.
The applications for reimbursement of costs incurred since July 1, 2022, were originally due by Dec. 31, 2022, but the deadline has been extended until March 31, 2023. According to ODJFS Director, Matt Damschroder, “the program has received 100 applications so far and approved nearly half of them, paying out nearly $900,000.”
To learn more and to apply, visit https://apprentice.ohio.gov/
Jan 03, 2022
Have your sales been hit by import competition? If so, the federal Trade Adjustment Assistance for Firms (TAAF) program may be able to help. For Ohio manufacturers, the program is managed by the Great Lakes Trade Adjustment Assistance Center (GLTAAC) who helps qualified manufacturers identify, develop, staff, and pay for critical business improvement projects. GLTAAC clients have received up to $75,000 in matching funds.
While TAAF matching funds are extremely beneficial, GLTAAC clients also value the planning assistance received from their experienced team of manufacturing professionals. The guidance helps to clarify which projects can best support each client’s growth strategy while matching funds help clients fast-track those important efforts – regardless of the project’s size. Here are just a few case studies to demonstrate the value of GLTAAC and how leveraging funding can aid your organization:
- Big impact from a quick and concentrated effort for an instrumentation manufacturer – An Ohio GLTAAC client had recently changed its name and required a rebrand with a new logo. After multiple conversations with key company stakeholders and a marketing consultant, a new logo was developed. The company’s website now features their re-designed logo and the GLTAAC client states, “This TAAF co-funded project was a simple, small – but strategic – marketing effort. Two weeks of intense work and results.”
- TAAF matching funds saved both money and time for Ohio foundry – When their existing ERP system was being phased out, this GLTAAC client knew they would use TAAF matching funds for outside IT expertise to migrate to a new system. However, they also recognized their shortage of a key resource: time. They elected to utilize TAAF co-funding to hire a consultant to serve as the internal project manager for the entire ERP upgrade process. The consultants managed and ran all aspects of the upgrade, which enabled the project to be completd on schedule without disruption. Total cost for both consultants: $91,000 (TAAF paid 50%).
If import competition has hurt your sales, don’t put off learning more about TAAF and GLTAAC. Here’s how to get started.
STEP ONE – Contact GLTAAC Project Manager, Jani Hatchett at firstname.lastname@example.org or 734.998.6227. Jani can quickly outline the TAAF program and help you determine whether your firm would qualify and provide the next steps.
Categories: Manufacturing & Distribution
Dec 20, 2021
State of the Global Economy
The same issues have been covered in the news cycle for months; supply chain malfunctions, production shortages, inflation, increased tariffs… all the reasons why businesses are facing heightened costs of resources this year. COVID-19-related disruptions have affected distributors and manufacturers worldwide, with gradual increases in the consumer prices index every month since the third quarter of 2020 (apart from May ‘21.) Numerous products including crude oil and petroleum products, natural gas, leather, lumber and wood, chemicals, and metal products have all seen substantial inflation (from 25% – 200%) in the last twelve months.
As costs go up, one tax leveraging option for those required to maintain inventories is the LIFO (last-in, first-out) inventory method. By using LIFO, goods sold throughout the year are deemed to come first from any goods purchased or produced during that year, then from the beginning inventory. As a result, inflation on items in the ending inventory is already included in the cost of goods sold, which may result in a lower taxable income.
LIFO is an alternative inventory valuation method, used by companies during periods of increased inflation to defer significant taxation. When adopting a LIFO inventory method, taxpayers can measure the effects of inflation on their internal and external prices by assuming the most recently purchased items are being sold first. This is achieved through an “inventory price index computation method,” using indexes published by the Bureau of Labor Statistics.
First, the taxpayer must ascribe value to all inventory (including beginning inventory) at cost. Then, say the LIFO method was adopted in the tax year 2020, the taxpayer should value all inventory at cost, ratably, for 2020 through 2022 and account for any necessary adjustments. In theory, the result of those adjustments would reflect the impact of inflation on company inventory and would then be deducted from taxable income and removed from the balance sheet.
It is required all taxpayers adopting the LIFO method for tax purposes, apply a LIFO computing method to book income. Additionally, all financial statements issued by the taxpayer must reflect computation under a LIFO method. To adopt LIFO, taxpayers must attach Form 970, Application to Use LIFO Inventory Method, to their federal income tax return.
Adopting a LIFO inventory method may not benefit all taxpayers. Companies considering the use of a LIFO method for the 2021 tax year should first perform a cost-benefit analysis in order to answer the following questions:
- What are the potential tax savings for the 2021 tax year if the company switched to LIFO?
- Historically, what trends has the company experience during periods of inflation?
- Do historic trends and potential tax savings warrant a switch to a LIFO inventory method?
- What costs are associated with implementing & maintaining LIFO computation in-house?
- Are the potential tax savings greater than the projected costs?
As always, our team of advisors is available to help you determine the best approach for your given situation.
Apr 28, 2021
While the Research and Development (R&D) Tax Credit has been around for some time, it remains one of the best opportunities for manufacturing and distribution companies to minimize their tax liability and leverage an immediate source of cash. The credit was designed to provide a tax incentive for U.S. companies to increase spending on research and development in the U.S.
How to qualify
What constitutes as R&D is much broader than manufacturers realize. Applying to not only the development of products, but also activities and operations, such as new manufacturing processes, environmental improvements, software development, and quality enhancements. The R&D credit is available to any business that incurs expenses while attempting to develop new or improved products or processes while on U.S. soil. A four-part test has been established to help manufacturers determine if they qualify:
- An activity that creates a new or improved business component of function, performance, reliability, or quality;
- Technological in nature and related to physical or biological science, engineering, or computer science;
- Intended to discover information to eliminate uncertainty in capability, method, or design;
- An activity that includes a process of experimentation, or evaluating one or more alternatives to achieve a result. This might include modeling, simulation, or systematic trial-and-error.
How to claim the credit
Since the credit may be claimed for both current and prior tax years, manufacturers should document their R&D activities to ensure they are positioned to claim the credit in both situations. You will be required to factually provide the number of qualified research expenses (QREs) paid with documentation such as payroll records, general ledge expense detail, project lists, and notes, etc. Qualified research expenses are defined as:
- Wages paid to people directly working on, supervising, or directly supporting the development process
- Supplies used or consumed during the development process
- Contract research expenses paid to a third party for performing qualified research activities on behalf of the company
- The cost of cloud service providers or leasing computers used in research activities
It is important to note that research doesn’t have to lead to a successful product or process for the expenses to count. Even if the project or research failed, you can still claim the credit.
Additional tax benefits
- Alternative Minimum Tax – Eligible small businesses with an average of $50 million or less in gross receipts over the past three years may claim the federal R&D tax credit against their alternative minimum tax liability beginning in 2016.
- Payroll Tax – Eligible startups can use the credit to offset payroll withholding taxes. Startups using the provision must have gross receipts of less than $5 million and no gross receipts prior to the five taxable years ending in the then-current tax year. The credit towards payroll withholding taxes is limited to $250,000 in one year, but companies can carry forward excess credits to apply to future payroll withholding taxes.
How we can help
For more information about R&D credits or reducing your company’s risk of facing penalties, contact our Manufacturing & Distribution Practice Leader below.
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Robert Bradshaw, CPA
Manufacturing & Distribution Practice Leader
email@example.com | 419.891.1040
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