Fund invests in rural business

Last week, the U.S. Department of Agriculture, Advantage Capital Partners, and eight farm credit institutions created a nearly $150 million Rural Business Investment Company fund to make equity investments in rural small businesses and help them grow and thrive.

Farm credit institutions provide the bulk of support for rural businesses in the form of loans and leases, but many small and new businesses need equity support in addition to borrowed funds. Equity investments provide the capital that is vital for a business to grow and expand.

While innovative thinking and an entrepreneurial spirit abound in rural America, it can be difficult for rural small businesses far away from Wall Street and Silicon Valley to attract the equity investors they need to take their businesses to the next level. Banks, including farm credit institutions, are traditionally not allowed to make equity investments in companies, which leaves rural businesses at a further disadvantage as they search for additional resources.

The fund, which is licensed by USDA, administered by Advantage Capital Partners and funded by private-sector dollars, helps to address that challenge by allowing banks to indirectly invest in rural businesses and provide the equity capital they need to grow and thrive in the long term.

The new fund helps to bridge the gap between available private capital and promising businesses involved in improved farming technology, the bioeconomy, local and regional food systems, processing and marketing of agricultural products, and agricultural exports. Ultimately, these investments should result in stronger, growing rural businesses that create new wealth and job opportunities in rural areas.

USDA is accepting applications to establish additional funds in order to further expand access to equity in rural America. This fund is one of several strategies underway as part of the Made in Rural America export and investment initiative, a broad effort by the Obama administration to rethink how to best leverage private sector resources to revitalize and re-energize the rural economy.

We believe that this fund can serve as a new model for how government can serve as a catalyst for private investment in rural America. It symbolizes a fresh way of thinking about how to bring the resources of urban cities to entrepreneurs in rural America and how the public and private sectors can come together to propel economic growth in communities across America.

' Tom Vilsack serves as the nation's secretary of agriculture. Scott Murphy serves as managing director and chief investment officer at Advantage Capital Partners. For information or to comment, go to www.usda.gov/investmentconference.