- change ups
Money for everything from farms to factories — and libraries
USDA Rural Development loans help growers with a variety of programs.
The U.S. Department of Agriculture is an important source of capital and assistance in finding capital for many rural Michiganders, ranging from local government officials to farmers, factory owners and others in small business.
The library in Lake Odessa, a small Ionia County village, is a case in point.
Ground was broken recently for the expansion of the Lake Odessa Community Library, and on hand for the ceremony was Jim Turner, state director for the USDA Rural Development agency in Lansing.
The agency is providing a $625,000 Community Facilities loan to support the project.
“In a knowledge-based economy, libraries have a central role in helping rural residents learn and communicate,” Turner said. “The expansion of the Lake Odessa Community Library is an investment in new economic opportunities for the area.”
The library serves Odessa Township and the Village of Lake Odessa and also contracts with Sebewa Township for library services. The expansion includes separate areas for children and teenagers, expanded technology space and a meeting room.
Since Turner was appointed to the top USDA Rural Development job in Michigan in 2009, it has invested more than $5.6 billion in Michigan projects.
As for the business sector, Turner said there is “quite a lot” that USDA Rural Development can do for small businesses. Its “flagship” program, he said, is the Business and Industry Loan Guarantees, which is designed to create jobs and stimulate rural economies by providing financial backing for rural businesses. The loan guarantees are available throughout the state except in cities of more than 50,000 and their immediately adjacent urban or semi-urban areas.
A few examples of West Michigan businesses with projects financed through the help of USDA loan guarantees are S2 Yachts in Holland, Mol-Son LLC in Mattawan, and a small commercial campground in Coldwater.
Mol-Son, a precision machine toolmaker in business since 1984, employs 85 people and serves a variety of industries in southwest Michigan.
Turner said USDA Rural Development’s projects include “everything from repairing a parking lot in a small town to help business there,” to giving financial support to marketing efforts that expand recreational opportunities for the tourist industry.
Another active program in USDA Rural Development is the Value-Added Producer Grant, available to farmers and agricultural product producers, and organizations such as farmer cooperatives. The grants can be used for feasibility analyses, development of business and marketing plans, and other types of studies that can help launch a viable value-added business venture.
Turner said examples of Producer Grants in West Michigan include the MOO-ville Creamery in Nashville, near Kalamazoo, and the Michigan Blueberry Growers Association headquartered in Grand Junction.
“I think they’re moving into yogurt now,” said Turner, referring to MOO-ville. The family-owned business has already made a name for itself in the region for its ice cream.
Blueberries are the largest cash value crop among all fruit and berry crops in Michigan, but there is a lot of competition and a very large crop to market. The growers association has used a USDA grant to study ways to expand the markets for blueberries, according to Turner.
Also among the dozens of types of loan and loan guarantee programs are the Rural Business Enterprise Grants that are awarded in an annual competition each spring. The grants often are used to help fund the start of business incubators. An incubator in Hart called The Starting Block is one such recipient.
USDA Rural Development programs fall under three basic categories: development of housing in communities with a population of 20,000 or less; business and cooperative programs in communities of 50,000 or less; and financing for rural utilities such as wastewater treatment in communities of less than 10,000.
Turner noted there is a new source of private capital for rural infrastructure that creates jobs. Although it is not a USDA Rural Development program per se, the USDA will be identifying projects that could be right for the new U.S. Rural Infrastructure Opportunity Fund.
“It’s not taxpayer dollars, and it’s a brand new initiative,” said Turner. It is an “opportunity for private capital to invest in rural infrastructure.”
The White House Rural Council announced the formation of the U.S. Rural Infrastructure Opportunity Fund in June, with an initial $10 billion in private capital already committed and more expected to follow.
The Rural Council announcement states that target investments will include hospitals, schools and other educational facilities, rural water and wastewater systems, energy projects, broadband expansion, local and regional food systems, and other rural infrastructure.
CoBank, a national cooperative bank based in Colorado that serves rural America and is a member of the Farm Credit System, is the fund’s anchor investor, committing the $10 billion to get it off the ground. The fund is managed by Capitol Peak Asset Management in Denver.
The White House Rural Opportunity Investment Conference was the first of its kind, a conference that brought together business and financial community leaders, administration and other government officials, rural development experts and others to promote investment opportunities in America's rural communities.
The fund is immediately open for business, and more investors can add to the initial $10 billion in available capital.
“As your readers know, there is a lot of capital lying around unused,” said Turner. Investments in community infrastructure “are a pretty safe return,” he said, because they are backed by government entities and have a low deficiency rate.
The community infrastructure projects are not restricted to the USDA’s population limits defining rural, he added.
In Michigan in a typical year, USDA Rural Development issues around $24 million worth of loan guarantees, according to Turner.
“Our biggest year probably was 2010, when we had additional funding under the American Recovery and Reinvestment Act” (also known as “the stimulus”), Turner said. “We did about $122 million worth of loan guarantees.”