July 5, 2016
Access to capital is a barrier many small-scale food entrepreneurs face when attempting to enter into a highly consolidated market. In many cases, new entrepreneurs do not have the necessary credit to qualify for traditional lending structures, making it nearly impossible to open new ventures.
Fortunately, organizations like the Feed the Hunger Foundation provide micro-loans to businesses that support a sustainable food economy. Feed the Hunger Foundation, based in California and Hawaii, operates as a micro-lending organization that provides financial footing for entrepreneurs who do not have access to capital, yet are poised to be successful contributors to the food system.
The Feed the Hunger Foundation uses a revolving loan fund to help farmers, value-added producers, and small businesses operate. A revolving loan fund provides lending capital, with loan repayments being paid back into the fund. As the fund replenishes, that money is used to fund another loan.
Recently, Feed the Hunger-Hawaii was able to increase the capital in their central fund by $500,000 through the U.S. Department of Agriculture’s (USDA) Rural Micro-entrepreneur Assistance Program (RMAP). RMAP provides loans and grants to Microenterprise Development Organizations (MDOs), – non-profit organizations, community-based financial institutions, and local economic development councils – which in turn provide technical services and micro-loans to rural small business owners in their states and local communities.
“Through RMAP, USDA has helped us grow our micro-lending program significantly,” said Robin Endres, Director of Development and Communications at Feed the Hunger Foundation. “This is not only critical to our food entrepreneurs’ livelihoods, but also where they are having an impact on the ground bringing in more healthy food options into their own communities.”
By increasing the capital circulating through their fund, Feed the Hunger can provide more micro-loans to organizations actively contributing to a sustainable food and agricultural system. For example, recent borrowers from Feed the Hunger-Hawaii include Naked Cow Dairy and Living Aquaponics:
Without support from micro-loans, operations like these would likely not have the capital necessary to sustain their businesses. Their successful use of such programs emphasizes the need for federal programs like RMAP.
Congress created RMAP in the 2008 Farm Bill, responding to proposals from the Center for Rural Affairs, an member organization of the National Sustainable Agriculture Coalition (NSAC), and NSAC as a whole. The program was reauthorized in the 2014 Farm Bill, which provided for $3 million in mandatory farm bill funding for RMAP each year from 2014 through 2018.
The current House and Senate appropriations bills provides no additional funding for RMAP funding levels for fiscal year 2017, despite a budget request from USDA for an additional $4.9 million. The National Sustainable Agriculture Coalition believes that the annual $3 million in farm bill funding vastly underserves micro-lending organizations. We are committed to continue pushing for an increase in funding to RMAP through the annual appropriations bill, so that businesses like Naked Cow Dairy and Living Aquaponics can continue to be part of the diverse landscape of food businesses, and micro businesses throughout the U.S. can continue to drive economic growth and revitalization.