Challenged by a lack of living wage jobs, many people living in small towns generate their own salaries by starting enterprises. Building a business in rural areas has special challenges, like transportation, access to markets and technology costs that are higher than those in the city. Similarly, access to credit can also be a huge hurdle for start-up companies. The Center for Rural Affairs (CFRA) of Lyons, Nebraska is working to address policies that would make it easier for small businesses and communities to thrive. The results may be encouraging to those seeking long-term solutions for poverty reduction.
With support from the Northwest Area Foundation, CFRA launched grassroots efforts that spawned one of the biggest wins for rural development in Farm Bill history. The USDA agreed to invest $45 million dollars in the Rural Microentrepreneur Assistance Program. Directed toward rural development, the program invests in organizations that provide training, assistance and loans to small firms with fewer than 10 employees and located in towns of no more than 50,000 people. The organizations, which are typically tribes, nonprofits and institutes of higher learning, reinvest in small town enterprises by providing assistance with marketing, management, operational support, business planning and loans of up to $50,000. The program is geared toward budding businesses and low-income entrepreneurs that typically have had trouble getting training and accessing capital they need to get started. The program will make its first awards in the fall of 2010.
“This program meets a critical need for access to capital. Banks and credit unions have tightened lending due to the recession and new banking regulations. Even if money becomes more available, financial institutions are reluctant to make loans in small geographic areas that they may not be familiar with,” said Valerie Plummer, executive director of the Oregon Microenterprise Network, which makes small business loans in rural areas.
In addition, support from Northwest Area Foundation funds an organized network of leaders in rural areas that can advance the conversation about federal rural development policy with elected officials.
“This new program shows the power of organizing rural groups. Together they can make a very real impact,” said Brian Depew, assistant director at the Center for Rural Affairs. “The people who live in small towns throughout Northwest Area Foundation’s service region stand to benefit greatly from this, since rural areas have a very high rate of small businesses and self employment.”
The Foundation joined with the Otto Bremer and C.S. Mott Foundations in funding outreach, additional organizing, and education to bolster the program. The Northwest Area Foundation’s $50,000 grant is aimed at helping small ventures gain access to this new source of credit and business training support. An example of the Foundation’s efforts to improve public policy, the grant supports outreach to rural development and anti-poverty organizations. The goal is to make small businesses in the Foundation’s region aware of new opportunities to start businesses in depressed areas and offer help in successfully applying for loans.
To learn more about the Rural Microentrepreneur Assistance Program funding application go to http://edocket.access.gpo.gov/2010/pdf/2010-18639.pdf or http://www.cfra.org/renewrural/federal-micro-program.
