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MiMfg Magazine
January 2020
USDA Funding Resources
for Manufacturers
By Jason Allen • USDA
One of the challenges facing rural businesses is
access to credit. Without it, otherwise viable businesses
can find themselves unable to make investments
necessary to remain competitive. This is particularly
true for rural small-scale manufacturers.
For small towns, the loss of even 100 jobs can be
devastating. That is why the U.S. Department of
Agriculture (USDA) Rural Development offers a
number of programs to assist rural businesses.
For example, Manthei Veneer suffered a
devastating fire in 2017, completely shutting down
operations and leaving a hundred employees at its
Petoskey facility without work. USDA Rural
Development provided a $5 million Business and
Industry Loan Guarantee to not only help the
company rebuild, but also upgrade and modernize
its equipment.
The maximum loan amount is $25 million. This
level of program funding represents a significant
opportunity for Michigan businesses seeking funding
for a wide variety of purposes. Eligible applicants
include any type of legally organized business entity
and individual business owners located in a community
of 50,000 or fewer population.
Loan purposes include:
• Business and industry acquisitions when the loan
will keep the business from closing, prevent the
loss of employment opportunities, or provide
expanded job opportunities,
• Business conversion, enlargement, repair,
modernization or development,
• Purchase and development of land, easements,
rights-of-way, buildings or facilities,
• Purchase of equipment, leasehold improvements,
machinery, supplies or inventory.
Energy costs are also a key consideration for
manufacturers. Through the Rural Energy for America
Program (REAP), USDA Rural Development can
help small businesses reduce these costs, either through
the deployment of renewable energy systems like
solar arrays or wind turbines, or through energy
efficiency improvements.
U.S. Department of Agriculture,
Washington DC
Grants are available for up to 25 percent of
project costs with a maximum amount of $250,000
for energy efficiency and $500,000 for renewable
energy. The program also offers loan guarantees for
up to 75 percent of project cost with a maximum
amount of $75 million.
Every dollar saved in production costs impacts
the bottom line, and a number of manufacturers
have benefitted from upgraded lighting as well as
heating and cooling systems.
Finally, USDA also offers opportunities for
manufacturers to work directly with local utilities to
obtain financing. The Rural Energy Savings
Program offers local utilities zero percent interest
rate loans that can be used to finance energy-saving
measures or to help with energy costs. The borrower
then re-lends these funds to area businesses. The
loan has a maximum term of 20 years and an interest
rate of no more than three percent.
Taken together, these are powerful tools that
can help rural manufacturing businesses thrive
and expand.
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Jason Allen is the USDA Rural Development State
Director for Michigan. For more information, or to
receive application materials, please contact the
Business Programs Division at 517-324-5157,
[email protected] or www.rd.usda.gov/mi.