Login | August 02, 2025
Bill would hike state’s investment in Appalachian business program
KEITH ARNOLD
Special to the Legal News
Published: August 26, 2024
The Republican senators backing a bill that would add to a program dedicated to increasing capital investment in rural Ohio businesses seek an additional $150 million of investment authority dedicated to the Appalachian region of the state.
Senate Bill 276, backed by Sens. Jerry Cirino of Kirtland and Brian Chavez of Marietta, calls on the state to contribute $90 million in tax credits toward the effort.
“The Appalachian region is an area with unique opportunities and with that comes unique challenges,” Chavez said during a Ways and Means Committee hearing in the Senate. “Currently, there is a gap in the accessibility of financing for small businesses, especially those in rural areas.”
He noted that stringent lending practices often prohibit small rural businesses from direct investment or investing through a bank.
“In today’s economy, small businesses do not have adequate financing options if they are not venture capital or private equity firms,” said Chavez. “The Ohio Rural Business Growth Program has proven to be one solution to bridging this gap, as evidenced by the success of the program’s previous funds.”
The program, established during the 132nd session of the General Assembly, authorized a nonrefundable tax credit for insurance companies investing in small businesses operating in counties with a population of 200,000 or fewer residents, Cirino explained during the hearing.
Credits were capped at $45 million.
Lawmakers enacted legislation during a subsequent session to establish a second program that not only authorized an additional $45 million in tax credits, but it modified investment criteria and established three tiers, based on county population.
Tier 1 comprised counties with a population between 200,000 and 150,000, while Tier 2 comprised counties with a population between 150,000 and 75,000; and Tier 3 comprised counties with a population of 75,000 or fewer residents, Cirino said.
“The Ohio Rural Business Growth Programs I and II leveraged $150 million of private capital,” he added. “Since 2017, $126 million has been invested in 34 unique companies across 24 rural counties in industries ranging from manufacturing, trucking and logistics, software, pharmaceuticals and beyond.”
SB 276 would require 50 percent of a fund’s loans or investments to be in businesses principally located in a county in the Appalachian Region and 75 percent in businesses principally located in a county having a population no greater than 150,000.
“Businesses located in underpopulated areas serve as the core of the rural economy,” Chavez said. “This program expansion will be significant not only for entrepreneurs but also for the dedicated workforce that spans the region.”
He said the region offers an abundance of resources that can be favorably utilized by businesses when they possess the capabilities to do so.
“Most counties within the region have annual budgets under $10 million,” he said. “With the potential investment of at least $75 million into the area, the benefits to the region are extensive.”
According to the Ohio Legislative Service Commission’s analysis of the bill, tax credits awarded to the investors of a rural business growth fund are contingent upon the fund making and maintaining a series of loans to, or investments in, rural business concerns.
“All funds must maintain their investments until the sixth anniversary of the closing date,” attorney Mackenzie Damon wrote for the commission. “Under continuing law, if a loan or investment is sold or repaid, it is considered to be ‘maintained’ so long as the fund reinvests or re-loans the returned capital, minus any profits, within one year.”
The bill awaits further consideration by the committee.
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