A $150 million program announced Monday by the U.S. Department of Agriculture aims to provide new capital to rural small businesses in agriculture-related industries.
The USDA has licensed the first Rural Business Investment Co., or RBIC, to invest in agriculture-related small businesses to help satisfy demand for capital among later-stage businesses in rural areas.
Even though the USDA and other federal agencies already offer loan guaranty programs to small businesses, Maxine Moul, director of USDA Rural Development in Nebraska, said there is a “definite need” for investment capital among these businesses in the state.
“We have requirements that businesses have a certain amount of equity already available, and unless the business has been in operation for a year or two, it’s sometimes very difficult to get to that level,” Moul said.
Federal officials hope the new program, which was authorized in the farm bill signed into law on Feb. 7, will attract more investment dollars to rural businesses that have traditionally struggled to bring in investors.
Bank funds from eight Farm Credit banks — including Farm Credit Services of America in Omaha — will be made available to qualifying rural businesses, which could include biotechnology companies, agricultural equipment manufacturers and rural communications providers.
New Orleans-based Advantage Capital Partners will manage the investment capital fund and will choose which businesses will receive investments.
The USDA is accepting applications for additional Rural Business Investment Cos. through 2016.
“If you’re looking to access the investment capital you need to grow your business, sometimes it’s available and sometimes it’s not,” said Jim Roberge, senior vice president of commercial lending at Farm Credit Services of America in Omaha. “This would be an additional opportunity.”