In northwest Michigan, a team of investors and lenders is taking a unique community-based approach to capitalizing on farmers and local food producers.
It is their commitment to both lending and learning that is making the difference.
In their first year, 2013–2014, members of the Northwest Michigan Food and Farm 20/20 Fund made 18 loans for a total of $1.5 million. This work resulted in 13 full-time jobs and two part-time jobs across five counties.
The group’s motto—“Lend and learn. Learn and lend.”—is working, says Susan Cocciarelli. Cocciarelli is a sustainable agriculture finance specialist from Michigan State University based at the region’s council of governments Networks Northwest.
“With 20/20 Fund successes—paid on time or even before due—conventional lenders are becoming more familiar with the sector and comfortable with the borrowers,” Cocciarelli says.
The 20/20 Fund’s innovative approach confronts some basic facts that complicate the already tough small business financing challenge that food and farm entrepreneurs face.
Bankers today are unfamiliar with the business of farming; commodity production borrowers are the mainstream of agricultural lenders. All lenders and investors are averse to the high cost of servicing smaller loans and big risks inherent in the largely startup sector.
Northwest Michigan’s business leaders understand, however, that food from the region, and for the region, is a major economic player. It feeds both tourism and small town quality of life on the Lake Michigan shoreline. Taking innovative steps to address big food and farm financing gaps is a natural.
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