The U.S. Department of Agriculture has had a full menu of loan programs, loan guarantee programs and grant programs to spur rural business development and innovation. But what was missing was a means to deliver equity capital to rural small businesses.
That changed this week, when the agency added yet another course to its buffet of financial offerings.
The USDA announced April 21 that it has formed a corporation to help private investment reach rural economic development projects and business startups, and backed the effort with $150 million in capital. According to Agriculture Secretary Tom Vilsac, the the new entity, called the Rural Business Investment Corporation (RBIC), will help small business in rural America launch, grow and create new jobs.
A USDA press release notes that the seed money for RBIC will come from the pledges of eight farm credit houses and Advantage Capital Partners, which will also manage the fund.
“This new fund will allow innovative small businesses throughout rural America to access the capital they need to grow and create jobs,” Vilsack said in a prepared statement. “One of USDA’s top priorities is to help re-energize the rural economy, and we now have a powerful new tool available to help achieve that goal. This new partnership will allow us to facilitate private investment in businesses working in bio-manufacturing, advanced energy production, local and regional food systems, improved farming technologies and other cutting-edge fields.”
The effort is part of the Obama Administration’s “Made in Rural America” program, an investment and export initiative that will also include a conference organized match big investors with rural small business leaders from different areas. The Rural Opportunity Investment Conference will take place this summer.
In the meantime, the RIBC will begin the work of backing rural business innovators with sorely needed equity funding. Financial institutions involved in the new corporation include AgriBank, of St. Paul, Minn.; CoBank, of Denver, Colo.; Austin, Texas-based Farm Credit Bank of Texas; Farm Credit Services of America, of Omaha, Neb.; and Farm Credit Mid-America, of Louisville, Ky.
The USDA also announced that it is accepting applications through July 29 for investors and financial institutions interested in forming more new Rural Business Investment Corporations.
Reference:
USDA. “USDA Announces $150 Million Investment Fund to Grow Small Businesses, Create Jobs in Rural America“. April 21, 2014.
