NSAC's Blog

Micro-Lending Can Do Big Things for Small Food Businesses

July 5, 2016

Pickles, the face of Naked Cow Dairy, with dairy owners, sisters Sabrina St. Martin and Monique van der Stroom. Photo credit: Nadine Kam, Hawaii Eats.

Pickles, the face of Naked Cow Dairy, with dairy owners, sisters Sabrina St. Martin and Monique van der Stroom. Photo credit: Nadine Kam, Hawaii Eats.

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:

  • Naked Cow Dairy is the only remaining dairy farm on the island of Oahu. Naked Cow uses only on feed sourced locally in Hawaii, does not use antibiotics or added hormones, and follows the organic guidelines for treating its cows. Naked Cow Dairy produces artisanal butters, cheeses and yogurts. They recently closed a loan with Feed the Hunger to finance kitchen retrofits that will help Naked Cow to meet labeling criteria that will open them up to new markets and expand their business.
  • Living Aquaponics is a family run business that manages two commercial aquaponic farms in Hawaii. In addition to offering farm tours, backyard aquaponics classes, and commercial training, Living Aquaponics also supplies local resorts with regional and fresh foods. Unable to keep pace with the growing demand from their resort clients, Living Aquaponics received a micro-loan from Feed the Hunger to open a second farm and scale up their trainings and operations.

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. If you also are a business owner, you can visit a place like compareyourbusinesscosts.co.uk/ and see how they can help you compare loan costs.

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.

Categories: Local & Regional Food Systems, Nutrition & Food Access, Rural Development

One response to “Micro-Lending Can Do Big Things for Small Food Businesses”

  1. This is great! We’d love to get our Upstart Farmer network connected to the folks at Feed the Hunger.