When Richard Seaman needed to add a $7 million, 19,000-square-foot expansion to his Wooster plant, he called officials from the Ohio Department of Development for help.
The president and CEO of Wooster-based Seaman Corp., a manufacturer of industrial fabrics, had worked with the state before in 1986 when he was forced to choose between expanding at an Ohio location or the Seaman plant in Tennessee.
The same question came about this time.
“We could have done the expansion in Tennessee or at the Wooster plant,” says Seaman. “I think what worked well for us was that we had a track record with the state. The company has grown since that time, promoting both job growth and retention.
“With this expansion, approximately 50 jobs will be retained here and approximately 30 will be added over the next three years.”
The state of Ohio is interested in both job retention and creation. The more jobs you keep or create, the more state aid that is likely to be available. Here are Seaman’s keys to working with the state to obtain funding.
* Start locally. “It is important as you start the process to work through local regional development people, whether it’s a separate organization or city officials, to be sure they understand what you are trying to do and what impact it will have locally,” says Seaman. “That way, when you get to the state level, you are sure that you have a lot of support from development and government organizations.”
* Take it to the top. “Don’t strictly rely on the local development people or organizations to carry the ball to the state level,” says Seaman. “You have to be very involved and persistent in contacting and working with officials at the state level of the department of development.”
* Be persistent. “Follow-through is very important so that you understand how your request is being processed and you understand what the state’s parameters are for offering incentive programs,” says Seaman.
“For the most part, you are not going to get free handouts or grants. Essentially, what they offer you is funding sources that are long-term and generally at fixed rates that will help solidify the predictability of what your funding costs are going to be in the future. It will help minimize the financial costs, and not only are these incentive programs better than conventional banking, but if the state provides you with incentive financing, it will preserve your normal capacity of lines of credit.”
Seaman says it is important to play an active role in obtaining funding from the state. Learn about the investment packages available and the requirements of each. Without the state’s assistance, Seaman says he either would not have done the expansion or done it at the company’s Tennessee plant.
“What I wanted to do is find a way to mitigate the financial risk — not eliminate it, just mitigate it,” says Seaman. “I would have been able to get bank financing. However, it would have been for a shorter term at an interest rate that might have been fixed for a few years. The state funding essentially assured me what my 10 to 15 year cash flow requirements would be and fixed them.
“If you have a need for capital and are either preserving or increasing jobs, and have a business with a track record of success and growth, then don’t hesitate to go to the state to try to get funding. Both in 1986 and our most recent expansion, they have been very responsive.” How to reach: Seaman Corp., (330) 262-1111
Seaman Corp. was able to work with the Ohio Department of Development to fund 65 percent of a $7 million expansion with long-term, low-interest, fixed-rate loans.
Those arrangements included:
* A taxable bond issue of up to $3.2 million through the Ohio Enterprise Bond Fund, to be paid back to the state over the next 15 years at 7.3 percent interest.
* A $1.1 million low-interest loan, at 3.25 percent, arranged through the Ohio Department of Development’s 166 Direct Loan Program.
* A $375,000 loan at 4.25 percent, a 166 Regional Loan arranged through the Akron Region of the Ohio Department of Development.
Richard Seaman, president and CEO of Seaman Corp., emphasizes taking an active role in the process to make sure you understand the parameters of each vehicle to maximize your funding.
For example, the company was originally supposed to receive a $500,000 Community Development Block Grant from the federal government, administered through the state to the local community. The money is a boon for the community, because the loan is paid back directly to the community, which can then reloan the money to other growth development opportunities.
“Unfortunately, Wooster was not timely in the application to the state for this, and the grant ended up getting denied because of their not being timely. As a result of that, the local community people became very aggressive in getting a Regional 166 Loan to replace that,” Seaman says.
“It’s very important if you are going to ask the state for incentive financing support to become very knowledgeable about the programs available and what the requirements are.”