Dollars at Work

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Unless you’ve been living under a rock the last two years, you know that we’re in the middle of a global economic crisis. The horse industry is particularly hard hit, because horses are a discretionary expense, and many people are cutting back on those. How does one even hope to survive or get started in the horse business during such a financial mess? There actually are monetary options out there if you take the time and put forth the effort to find them.

Small Business Organizations

There is no such thing as free money from the Federal Government to start or expand a small business, so don’t believe all those Internet ploys. There are many government grants available, but they mostly go toward special projects, charities, non-profit organizations and educational institutions.

Still, the Small Business Association (SBA) is an outstanding place to start for anyone running an equine operation. Visit www.sba.gov. Most SBA grants also go to non-profit groups or programs aimed at economic revitalization and technological research. However, the SBA can connect you with government resources for business grants.

The SBA also has a guaranteed loan program that helps small businesses get started, expand and buy new facilities and equipment. Applying for a business loan takes much more time to prepare than applying for a car loan, or even a home mortgage. You must have a solid business plan in place or you won’t get very far. But, this is a good practice for any business, even ones not seeking a loan.

Along with the SBA, the non-profit organization SCORE, “Counselors to America’s Small Business,” is an extremely valuable source of information. You can find them at www.score.org. They describe themselves as “a nonprofit association dedicated to educating entrepreneurs and the formation, growth and success of small business nationwide.”

SCORE lists the following five tips to creatively search for funding.

1. Contact your state, county and local development departments. Many offer funding programs to foster business within a certain geographic area.

2. Take advantage of organizations aimed at helping you. The National Organization of Women Business Owners offers special funding programs for women entrepreneurs, for example, and the National Minority Supplier Development Council has an arm that works with minority entrepreneurs.

3. Call on the community banks in your area. These smaller banks pride themselves on helping small business owners.

4. Find out if you qualify for revolving loan fund (RLF) programs. These provide “gap financing” that your bank won’t or can’t offer. Your banker should know of any RLFs available.

5. Visit the finance section of the SBA website. It provides details on SBA’s many funding programs. Perhaps you qualify for one.

State and Local Funding

Whether or not horse operations are properly considered agriculture is debatable, but Ag programs are another avenue to pursue. Online resources are extensive, and offer the easiest way to search databases of available funds, who is eligible and how to apply. It is crucial to follow directions to the letter or your request will likely be denied.

Are you just starting out in the horse business? Many state Departments of Agriculture have Beginning Farmer Loan Programs. The Federal Government allows tax-exempt status to those states that help first time farmers buy land, equipment, buildings and livestock with a reduced-interest loan. Typically, every state also has a department of commerce or an economic development agency that administers grants. The Directory of State Programs (www.stateag­finance.org/directory.html) lists details and contact information for funding programs offered by state agriculture departments.

SCORE offers the following advice on state and local funding:

1. Don’t overlook city, county or state governments when you seek capital. Many economic development offices have funding-assistance programs for qualified small firms.

2. Understand the purpose and the requirements of the program you’re interested in. It may call for raising matching funds or creating jobs.

3. Be modest in making projections. For example, don’t inflate the number of jobs you think you can generate with your project in hopes of getting a larger grant.

4. Take advantage of “in-kind” credits. Like cash, these can be used as matching funds. In one case, a state program counted a company’s $200,000 local property tax abatement as part of the matching requirement.

5. Have a good business plan and strong management team in place. That will help you make your case.

When it comes to Ag financing, look at farm banks, which have a higher proportion (usually 14 percent and up) of farm real estate and production. They offer a variety of loans to all sizes of farms and agribusiness firms. Farm credit systems also loan money and provide lines of credit for both full-time and two-career farmers. Typical loan types are short-term (under two years), to cover operational expenses; two- to five-year loans for purchasing equipment; and long term loans (10 years and up) for real estate or major construction projects and new buildings. Go to www.fccouncil.com to learn more.

Federal Funding

The United States Department of Agriculture (USDA) has numerous programs available for financial resources. For example:

• The Farm Service Agency makes loans to farmers, and Rural Development has the value-added producer grant program and the small minority producer grant program. The ATTRA lists sustainable Ag-related funding information that is updated weekly and also has a guide to Federal funding programs. Go to www.attra.ncat.org to search online or request a hard copy directory.

• Visit the Alternative Farming Systems Information Center’s website (www.afsic.nal.usda.gov) to find more agricultural funding resources.

• The National Agricultural Library, Rural Information Center has compiled a funding resource from a variety of different databases. You can search it online at www.nal.

usda.gov; a hardcopy version is also available by request.

• The online Catalog of Federal Domestic Assistance (www.cfda.gov) is a searchable database that lists all federal programs along with eligibility requirements and contact info.

• The Foundation Center (www.foundationcenter.org) also has a lot of free information. It offers step-by-step instructions on the funding research process. If you sign up for a subscription, you will have access to over 80,000 grant makers.

• In April 2009, the USDA (www.usda.gov) announced that it was making $17 million available in grants through the beginning farmer and rancher development program. According to Agriculture Secretary Tom Vilsack, “This program underscores President Obama’s commitment to support the nation’s beginning farmers and ranchers. Through the beginning farmer and rancher grant program, we can help ensure that we are doing all we can for the next generation of America’s farmers and ranchers.” The program provides education, training, technological assistance and outreach programs aimed at farmers who have been in business 10 years or less. The project will be limited to three years and makes grants available to state, local, tribal, regional, non-profits, community-based organizations, academic institutions and other private and public organizations to design programs aimed at helping beginning farmers.

• One of the best places to research Federal programs is on the website Grants.gov. This is composed of a group of federal agencies that compiles over 1,000 grant programs from 26 federal grant-making agencies. It was first called the E-Grants Initiative and was part of the 2002 Fiscal Year Management Agenda to improve government services to the public. Approximately $500 billion is given out in annual awards.

Finding funds to start up, operate or improve your existing facility is a daunting task, but there are many financial options available if you make the effort to look. Before jumping in, however, assemble a quality business plan and other financial records. Then take your time and research the local, state and even federal options that work best for your specific situation.