As part of the Obama Administration’s new “Made in Rural America” export and investment initiative, Agriculture Secretary Tom Vilsack today announced the creation of a new investment fund that will help propel the growth of small businesses across rural America. The new Rural Business Investment Company (RBIC) will now allow USDA to facilitate private equity investments in agriculture-related businesses. Currently, USDA programs exist to help provide loans or loan guarantees to help rural businesses grow, but many small cutting-edge businesses also need equity support in addition to or instead of borrowed funds.
Advantage Capital Partners, which will manage the new fund, and their partners from eight Farm Credit institutions have pledged to invest nearly $150 million into the new effort.
“This new fund will allow innovative small businesses throughout rural America to access the capital they need to grow and create jobs,” Vilsack said. “One of USDA’s top priorities is to help reenergize 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 fund is being formed under the USDA’s Rural Business Investment Program (RBIP). USDA utilizes RBIP to license funds to invest in enterprises that will create growth and job opportunities in rural areas, with an emphasis on smaller enterprises. Working through the USDA program enables licensed funds to raise capital from Farm Credit System banks and associations.
The Farm Credit System, a nationwide network of banks and lending associations specifically chartered to serve agriculture and the U.S. rural economy, is an essential provider of credit to agriculture and rural America. This new partnership between Farm Credit institutions and Advantage Capital, a leading growth capital and small business finance firm, brings together resources and people that are focused on providing more private capital, small business investment and quality jobs to rural America. This public-private partnership will have a tangible positive impact on our rural economy and is a model of how government can serve as a catalyst for private investment in rural America.
Eight Farm Credit institutions providing initial investments in the RBIC fund are: AgStar Financial Services (Mankato, Minn.); AgriBank (St. Paul, Minn.); Capital Farm Credit (Bryan, Texas); CoBank (Denver, Colo.); Farm Credit Bank of Texas (Austin, Texas); Farm Credit Services of America (Omaha, Neb.); Farm Credit Mid-America (Louisville, Ky.); and United Farm Credit Service (Willmar, Minn.).
USDA also announced that it will be accepting applications for other new Rural Business Investment Companies such as the one announced today. Interested applicants have until July 29 to submit their applications for review in FY2014. Any application accepted after this deadline will be held for consideration next year. USDA intends to accept RBIC applications through 2016, detailed information including application materials and instructions can be found at: www.rurdev.usda.gov/BCP_RBIP.html.