[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
61-954 PDF
2025__
2025
USDA'S RURAL DEVELOPMENT: DELIVERING VITAL PROGRAMS AND SERVICES TO
RURAL
AMERICA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMODITY MARKETS, DIGITAL ASSETS, AND RURAL
DEVELOPMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 18, 2025
__________
Serial No. 119-16
Printed for the use of the Committee on Agriculture
agriculture.house.gov
?
COMMITTEE ON AGRICULTURE
GLENN THOMPSON, Pennsylvania, Chairman
FRANK D. LUCAS, Oklahoma ANGIE CRAIG, Minnesota, Ranking
AUSTIN SCOTT, Georgia, Vice Minority Member
Chairman DAVID SCOTT, Georgia
ERIC A. ``RICK'' CRAWFORD, Arkansas JIM COSTA, California
SCOTT DesJARLAIS, Tennessee JAMES P. McGOVERN, Massachusetts
DOUG LaMALFA, California ALMA S. ADAMS, North Carolina
DAVID ROUZER, North Carolina JAHANA HAYES, Connecticut
TRENT KELLY, Mississippi SHONTEL M. BROWN, Ohio, Vice
DON BACON, Nebraska Ranking Minority Member
MIKE BOST, Illinois SHARICE DAVIDS, Kansas
DUSTY JOHNSON, South Dakota ANDREA SALINAS, Oregon
JAMES R. BAIRD, Indiana DONALD G. DAVIS, North Carolina
TRACEY MANN, Kansas JILL N. TOKUDA, Hawaii
RANDY FEENSTRA, Iowa NIKKI BUDZINSKI, Illinois
MARY E. MILLER, Illinois ERIC SORENSEN, Illinois
BARRY MOORE, Alabama GABE VASQUEZ, New Mexico
KAT CAMMACK, Florida JONATHAN L. JACKSON, Illinois
BRAD FINSTAD, Minnesota SHRI THANEDAR, Michigan
JOHN W. ROSE, Tennessee ADAM GRAY, California
RONNY JACKSON, Texas KRISTEN McDONALD RIVET, Michigan
MONICA De La CRUZ, Texas SHOMARI FIGURES, Alabama
ZACHARY NUNN, Iowa EUGENE SIMON VINDMAN, Virginia
DERRICK VAN ORDEN, Wisconsin JOSH RILEY, New York
DAN NEWHOUSE, Washington JOHN W. MANNION, New York
TONY WIED, Wisconsin APRIL McCLAIN DELANEY, Maryland
ROBERT P. BRESNAHAN, Jr., CHELLIE PINGREE, Maine
Pennsylvania SALUD O. CARBAJAL, California
MARK B. MESSMER, Indiana
MARK HARRIS, North Carolina
DAVID J. TAYLOR, Ohio
______
Parish Braden, Staff Director
Brian Sowyrda, Minority Staff Director
______
Subcommittee on Commodity Markets, Digital Assets, and Rural
Development
DUSTY JOHNSON, South Dakota, Chairman
JOHN W. ROSE, Tennessee, Vice Chair DONALD G. DAVIS, North Carolina,
FRANK D. LUCAS, Oklahoma Ranking Minority Member
AUSTIN SCOTT, Georgia DAVID SCOTT, Georgia
DAVID ROUZER, North Carolina NIKKI BUDZINSKI, Illinois
TRACEY MANN, Kansas JONATHAN L. JACKSON, Illinois
KAT CAMMACK, Florida SHRI THANEDAR, Michigan
BRAD FINSTAD, Minnesota ADAM GRAY, California
ZACHARY NUNN, Iowa KRISTEN McDONALD RIVET, Michigan
ROBERT P. BRESNAHAN, Jr., SHOMARI FIGURES, Alabama
Pennsylvania EUGENE SIMON VINDMAN, Virginia,
MARK B. MESSMER, Indiana Vice Ranking Minority Member
DAVID J. TAYLOR, Ohio JOHN W. MANNION, New York
APRIL McCLAIN DELANEY, Maryland
(ii)
C O N T E N T S
----------
Page
Craig, Hon. Angie, a Representative in Congress from Minnesota,
opening statement.............................................. 4
Prepared statement........................................... 6
Submitted letter on behalf of Bill Broydrick, Executive
Director, National Rural Lenders' Roundtable............... 90
Davis, Hon. Donald G., a Representative in Congress from North
Carolina, opening statement.................................... 3
Prepared statement........................................... 4
Johnson, Hon. Dusty, a Representative in Congress from South
Dakota, opening statement...................................... 1
Prepared statement........................................... 2
Submitted letters on behalf of:
Lipsetz, David, President and Chief Executive Officer,
Housing Assistance Council............................. 75
Waldorf, Jack, Executive Director, Western Governors'
Association............................................ 76
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, prepared statement............................... 7
Submitted statement on behalf of Anthony Pipa, Senior Fellow,
Center for Sustainable Development, Brookings Institution;
Brent Orrell, Senior Fellow, American Enterprise Institute. 88
Witnesses
Brand, Bette, former Deputy Under Secretary, Rural Development,
U.S. Department of Agriculture; President and Chief Executive
Officer, Strategic Consulting LLC, Roanoke, VA................. 8
Prepared statement........................................... 9
Heimel, Hon. Paul, Commissioner, Potter County, Pennsylvania,
Cowdersport, PA; on behalf of National Association of Counties. 31
Prepared statement........................................... 32
Forbes, J.D., Lynne Keller, President and Chief Executive
Officer, South Eastern Council of Governments, Sioux Falls, SD;
on behalf of National Association of Development Organizations. 39
Prepared statement........................................... 41
Torres Small, J.D., Hon. Xochitl, former Deputy Secretary, U.S.
Department of Agriculture; Executive Director, Quivira
Coalition, Las Cruces, NM...................................... 46
Prepared statement........................................... 48
Submitted question........................................... 92
USDA'S RURAL DEVELOPMENT: DELIVERING VITAL PROGRAMS AND SERVICES TO
RURAL AMERICA
----------
THURSDAY, SEPTEMBER 18, 2025
House of Representatives,
Subcommittee on Commodity Markets, Digital Assets, and
Rural Development,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300, Longworth House Office Building, Hon. Dusty Johnson
[Chairman of the Subcommittee] presiding.
Members present: Representatives Johnson, Rose, Lucas,
Mann, Finstad, Nunn, Bresnahan, Messmer, Taylor, Davis, David
Scott of Georgia, Figures, Mannion, McClain Delaney, and Craig
(ex officio).
Staff present: Laurel Lee Chatham, Austin DeBerry, Sofia
Jones, Josh Stull, John Konya, Suzie Cavalier, Joshua Lobert,
Emma Simon, and Jackson Blodgett.
OPENING STATEMENT OF HON. DUSTY JOHNSON, A REPRESENTATIVE IN
CONGRESS FROM SOUTH DAKOTA
The Chairman. Ladies and gentlemen, the Committee will come
to order.
Welcome, and thank you for joining today's hearing
entitled, USDA's Rural Development: Delivering Vital Programs
and Services to Rural America. After brief opening remarks,
Members will receive testimony from our witnesses today, a
really excellent panel, and then the hearing will be open to
questions.
In consultation with the Ranking Member, Mr. Davis, and
pursuant to Rule XI(e), I want to make Members of the
Subcommittee aware that Members of the full Committee will be
joining us today.
Today, we are going to hear from great rural leaders and
former USDA Rural Development officials about why the programs
and services that Rural Development provides to rural America
are so incredibly important. This builds on a series of rural
development hearings that this Subcommittee has had in recent
years. Last Congress, we examined programs that support
broadband, energy, water systems, rural businesses and
industry, rural cooperatives, and biomanufacturing. USDA Rural
Development is uniquely positioned to serve our rural
communities. Today, we will learn about the various programs
that provide needed investment in our rural communities,
essential infrastructure, small businesses, and economic
development. So, let's just highlight a few so we are all on
the same page.
We have the Community Facilities Loan & Grant Programs.
Those are crucial tools to provide essential community
infrastructure in rural America. Projects include fire and
rescue stations, village and town halls, healthcare clinics,
hospitals, adult and childcare centers, assisted living
facilities, rehabilitation centers, public buildings, schools,
libraries, and many other community-based initiatives. Just, it
is hard to imagine what our rural communities would look like
without them. The Value-Added Producer Grant program is really
an unsung hero of the RD programs. Farmers and ranchers are
eligible for this program that helps them enter value-added
activities to generate new products, create and expand
marketing opportunities, and, essentially, increase income. The
Rural Economic Development Loan and Grant programs provide
funding for rural projects through local utility organizations.
USDA RD provides zero-interest loans to local utilities, which
they, in turn, pass through to local businesses for projects
that will create and retain employment in rural areas.
The Rural Business Investment Program promotes economic
development and creates jobs and wealth opportunities by
supporting the equity capital investment needs in rural
America. The Rural Microentrepreneur Assistance Program
provides loans and grants to micro-enterprise development
organizations--MDOs--to help micro-enterprises start up and
grow through a Rural Microloan Revolving Fund and provide
training and technical assistance to microloan borrowers and
micro-entrepreneurs. That is lots of acronyms but also a lot of
good for rural America. Most of these programs were
reauthorized in the Farm Food and National Security Act of 2024
(H.R. 8467), and so they have an expiration date. As we move
forward with reauthorizing expiring USDA RD programs, the
feedback and the conversations that we are having here today
will help us improve these vital programs so that we can even
better serve rural America and the rural communities that all
of us here represent.
I want to thank each of our witnesses for your service to
rural America and for the perspectives you bring today. I have
a couple of personal friends on the panel, and so I am excited
about that as well. We will talk about that in a minute. I do
want to recognize the distinguished Ranking Member for any
remarks he would like to make. Just as a note, he and I have
generally run this Subcommittee in a bipartisan manner, both of
us kind of managing/serving as Chairman of the Subcommittee.
And so, I don't want anybody to get nervous assuming the
Minority party has seized control of the dais.
[Laughter.]
The Chairman. If Mr. Davis recognizes you, that is just as
valid as a recognition from Mr. Johnson.
[The prepared statement of Mr. Johnson follows:]
Prepared Statement of Hon. Dusty Johnson, a Representative in Congress
from South Dakota
Today, we will hear from rural leaders and former USDA Rural
Development officials about why the programs and services they provide
are vital to rural America.
This builds on the series of rural development hearings this
Subcommittee has held in recent years. Last Congress, we examined
programs that support broadband, energy, water systems, rural business
and industry, rural cooperatives, and biomanufacturing.
USDA Rural Development is uniquely positioned to serve our rural
communities. Today we will learn about various programs that provide
needed investment in our rural communities' essential infrastructure,
small business, and economic development.
To highlight a few: the Community Facilities Loan and Grant
Programs at Rural Development are crucial tools to provide essential
community infrastructure in rural America. Projects include fire and
rescue stations, village and town halls, health care clinics,
hospitals, adult and child-care centers, assisted living facilities,
rehabilitation centers, public buildings, schools, libraries, and many
other community-based initiatives.
The Value-Added Producer Grant Program is the unsung hero of RD
programs. Farmers and ranchers are eligible for this program that helps
them enter value-added activities to generate new products, create and
expand marketing opportunities, and increase income.
The Rural Economic Development Loan and Grant programs provide
funding for rural projects through local utility organizations. USDA RD
provides zero-interest loans to local utilities which they, in turn,
pass through to local businesses for projects that will create and
retain employment in rural areas.
The Rural Business Investment Program promotes economic development
and creates job and wealth opportunities by supporting the equity
capital investment needs in rural America.
The Rural Microentrepreneur Assistance Program provides loans and
grants to Microenterprise Development Organizations (MDOs) to help
microenterprises start up and grow through a Rural Microloan Revolving
Fund and provide training and technical assistance to microloan
borrowers and micro entrepreneurs.
Most of these programs were reauthorized in the Farm, Food, and
National Security Act of 2024, as they have an expiration date. As we
move forward with reauthorizing expiring USDA RD programs, the feedback
received here today will help us improve these vital programs that
serve rural America and the rural communities we represent.
I want to thank each of our witnesses for your service to rural
America and for the perspectives you bring today. I am especially
excited that Ms. Lynn Forbes, my constituent, is here to share hers.
The Chairman. So, with that, my friend, Mr. Davis.
OPENING STATEMENT OF HON. DONALD G. DAVIS, A REPRESENTATIVE IN
CONGRESS FROM NORTH CAROLINA
Mr. Davis. Thank you so much, Mr. Chairman. It is truly an
honor to be on this journey with you. And I must admit, as a
mayor growing up in Snow Hill, North Carolina and eventually
making my way to Congress, one of the things I had in my mind
was rural development, and we realize the importance of Rural
Development. Rural Development is the heartbeat--it is the
heartbeat--of many communities across this nation, and
especially in a district like the 1st Congressional District,
22 counties. One hundred percent of the counties are rural. So,
we are here for a really important reason today, and I think
about the investments that are made, and as these investments
are made in rural America, it makes a huge difference.
This past Saturday, I showed up at Nashville Fire
Department for the ribbon cutting of Fire Station Number 2. It
could not have happened without rural development. The
Community Facilities Program granted help for this fire
station. The Community Facilities Program provides affordable
funding to build and construct essential rural community
facilities, such as firehouses, police stations, and community
centers. Another successful program and that is really
important to me is the ReConnect Loan and Grant Program. Oh
god, I can't tell you when I think about living in eastern
North Carolina and broadband, and the need to make important
connections.
So, these are just some of the programs. I could continue
on, RBDG in terms of the Rural Business Development Grants--
these programs are essential. So, when we come together as a
Subcommittee to have meaningful conversations, these
conversations are dire and critical as we talk about rural
America. So, with that in mind, Mr. Chairman, I look forward to
having a wonderful Subcommittee hearing today, and I yield
back.
[The prepared statement of Mr. Davis follows:]
Prepared Statement of Hon. Donald G. Davis, a Representative in
Congress from North Carolina
Thank you so much, Mr. Chairman. It's truly an honor to be on this
journey with you.
And I must admit, as a mayor, growing up in Snow Hill, North
Carolina, and eventually making my way to Congress, one of the things I
had on mind in my mind was rural development.
And we realize the importance of rural development.
Rural development is the heartbeat. It's the heartbeat of many
communities across this nation, and especially in a district like the
1st Congressional District, 22 counties, 100 percent of the counties
are rural.
So, we're here for a really important reason today. And I think
about the investments that are made.
And as these investments are made in rural America, it makes a huge
difference.
This past Saturday, I showed up at Nashville Fire Department for
the ribbon cutting of Fire Station Number 2.
It could not have happened without rural development.
The Community Facilities Program grant helped for this fire
station.
The Community Facilities Program provides affordable funding to
build and construct essential rural community facilities such as
firehouses, police stations and community centers.
Another successful program, and that's really important to me, is
the ReConnect Loan and Grant Program.
Oh, God, I can't tell you when I think about living in eastern
North Carolina and broadband and the need to make important
connections.
So, these are just some of the programs I could continue on, that
are back in terms of Rural Business Development, Development Grants;
these programs are essential.
So when we come together as a Subcommittee to have meaningful
conversations, these conversations are dire and critical as we talk
about rural America.
So, with that in mind, Mr. Chairman, I look forward to having a
wonderful Subcommittee hearing today, and I yield back.
The Chairman. Let's recognize my neighbor in Minnesota, the
Ranking Member of the full Committee, Ms. Craig, for any
comments she would like to make.
OPENING STATEMENT OF HON. ANGIE CRAIG, A REPRESENTATIVE IN
CONGRESS FROM MINNESOTA
Ms. Craig. Thank you, Mr. Chairman. I am still waiting on
you to offer that gavel to me, too. We will talk to the
Chairman about that when he gets here.
[Laughter.]
Ms. Craig. Thank you so much, Chairman Johnson and Ranking
Member Davis, for holding today's hearing, and thank you to our
witnesses for being here today to discuss one of the most
pressing issues facing this Committee: uplifting and supporting
rural America. A special welcome to my former colleague,
Xochitl Torres Small, a former Under Secretary of USDA. It is
so good to see you here and back in the building again.
Rural America is frequently portrayed as a monolith,
especially by those in D.C. We too often fail to recognize its
diversity, not just of people, but of industry, opportunity,
and challenges. Farmers, their families, and their businesses
are the engines of small towns across Minnesota, but those same
places are also the home to teachers and nurses, manufacturers,
and small businesses, and right now, too many of them are
hurting. If you are a farmer, you are dealing with high cost,
low prices, and not enough markets. If you are opening a
business for the first time, you may have no access to high-
speed internet and face severe workforce shortages. And if you
are raising a family there or taking care of an aging parent,
the cost of groceries and healthcare are increasing, and your
ability to access a childcare center, a daycare, a doctor close
to home is getting more difficult by the day.
You know, my colleagues' so-called One Big Beautiful Bill
(Pub. L. 119-21), in my view, is a direct assault on rural
healthcare. It slashed Medicaid by nearly $1 trillion. The
Rural Health Care Fund that my colleagues are touting as a new
investment does not come close to correcting the damage that
the bill will do in rural America, both to our health
infrastructure and other areas. In my home State of Minnesota,
rural clinics are already closing because of these seismic
Medicaid changes, forcing people to travel many, many miles
further to receive medical care. It doesn't end there. This
week, House Republicans are pushing a government funding bill
through the House that would increase healthcare premiums by as
much as 90 percent in many rural areas by allowing the ACA tax
credits to expire, hitting many rural communities, family
farmers, right in the pocketbook. There is no reason why we
can't fix the problem right now.
These policies do not grow local economies, lower costs, or
improve access to the critical services that our rural
communities need. Rural America needs meaningful investments,
not cuts to hospitals, which are often the largest employers in
many rural counties. It needs access to reliable high-speed
internet so that farmers and entrepreneurs can access the
information and services that they need to thrive. It needs
adequately-qualified teachers, childcare providers, and
affordable housing so that rural communities can grow. It needs
new economic opportunities so that our kids don't leave for
college in the ``big city'' and never come back. It needs
vibrant main streets so that rural businesses and communities
can grow together. It needs trade policy that doesn't undermine
American agriculture.
The seeds of those investments start here in this
Subcommittee. They grow at USDA Rural Development. They bear
fruit in small towns around this country. I am glad we are
taking a comprehensive look at what USDA Rural Development
programs can do. While these programs are beneficial, they do
not exist in a vacuum. Economic opportunities in rural America
depend on the basics, like access to healthcare, a good
education, and jobs, and our discussion cannot lose sight of
that because on all of those fronts, Republican policies are
failing. I look forward to hearing from today's panel on how
USDA Rural Development programs can support rural communities
during these difficult times. Thank you again, Mr. Chairman,
for being here, all of our witnesses, and I yield back.
[The prepared statement of Ms. Craig follows:]
Prepared Statement of Hon. Angie Craig, a Representative in Congress
from Minnesota
Thank you, Chairman Johnson and Ranking Member Davis, for holding
today's hearing, and a thank you to our witnesses for being here today
to discuss one of the most pressing issues facing this Committee:
uplifting and supporting rural America.
Rural America is frequently portrayed as a monolith, especially by
those in D.C. We too often fail to recognize its diversity, not just of
people but of industry, opportunity and challenges.
Farmers, their families and their businesses are the engines of
small towns across Minnesota--but those same places are also the home
to teachers and nurses, manufacturers and small businesses. And right
now, too many of them are hurting.
If you're a farmer, you're dealing with high costs, low prices, and
not enough markets.
If you're opening a business for the first time, you may have no
access to high-speed internet and face severe workforce shortages.
And if you're raising a family there or taking care of an aging
parent, the cost of groceries and health care are increasing and your
ability to access a doctor close to home is getting more difficult by
the day.
Republicans' so-called One Big Beautiful Bill is a direct assault
on rural health care. It slashed Medicaid by nearly $1 trillion. The
rural health care fund that Republicans are touting as a new investment
does not come close to correcting the damage their bill will do rural
America's health infrastructure. Just the latest attempt to put
lipstick on this pig.
In my home state of Minnesota, rural clinics are already closing
because of these ``seismic Medicaid changes''--forcing people to travel
miles further to receive medical care.
It doesn't end there. This week, House Republicans are pushing a
government funding bill through the House that would increase health
care premiums by as much as 90 percent in many rural areas by allowing
ACA tax credits to expire, hitting many rural Americans and farmers
right in the pocketbook. There is no reason we can't fix that problem
right now.
These policies do not grow local economies, lower costs or improve
access to the critical services rural communities need.
Rural America needs meaningful investments, not cuts to hospitals,
which are often the largest employers in many rural counties.
It needs access to reliable, high-speed internet so that farmers
and rural entrepreneurs can access the information and services they
need to thrive.
It needs adequately qualified teachers, child care providers and
affordable housing, so that rural families can grow.
It needs new economic opportunities so that our kids don't leave
for college in the ``big city'' and never come back.
It needs vibrant main streets so that rural businesses and
communities can grow together.
It needs trade policy that doesn't undermine American agriculture.
The seeds of those investments start here, in this Subcommittee.
They grow at USDA Rural Development. They bear fruit in small towns
across the country.
I am glad we are finally taking a comprehensive look at what USDA
Rural Development programs can do. While these programs are beneficial,
they do not exist in a vacuum. Economic opportunities in rural America
depend on the basics, like access to health care, a good education and
jobs, and our discussion cannot lose sight of that. Because on those
fronts, Republican policies are failing.
I look forward to hearing from today's panel on how USDA Rural
Development programs can support rural communities during these
difficult times.
Thank you again for being here today, and I yield back.
The Chairman. The chair would request that other Members
submit their opening statements for the record so the witnesses
may begin their testimony to ensure that there is ample time
for questions.
[The prepared statement of Mr. Thompson follows:]
Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning. Thank you to Chairman Johnson and Ranking Member
Davis for convening this hearing to discuss the importance of Rural
Development programs and services at the United States Department of
Agriculture.
Our rural communities are the heartbeat of rural America, the
backbone of our great nation. Investing in these communities through
USDA Rural Development programs is crucial to keep our rural
communities strong, including for America's farmers, producers, and
ranchers.
We must not leave rural communities behind, and we can help by
reauthorizing Rural Development programs in Titles VI and IX of the
farm bill that directly support our rural residents through grants,
loans, and technical assistance.
The beauty of USDA's Rural Development is its structure. There are
three agencies at the national level. Then, there are state-level
offices led by State Directors, who work with local offices across
their respective states to implement RD programs and services. The
State Directors, like Pennsylvania's State Director Mike Cabell, and
their local staff know their communities better than anyone. They are
an integral part of their communities. Not every Federal agency can say
the same. Rural Development programs and services are best housed at
USDA, where they have long provided specialized services to rural
communities that other agencies do not understand.
With that top of mind, I share the principles underlying
Agriculture Secretary Brooke Rollins' plan for USDA reorganization,
which at its core is to improve customer service and optimize the use
of finite taxpayer resources.
As USDA implements Sec. Rollins' reorganization plan, I look
forward to working with USDA to ensure these principles for rural
America are upheld.
I look forward to hearing from our witnesses today on USDA Rural
Development programs and services that were not highlighted or covered
in recent House Agriculture Committee hearings.
Here are a few examples of vital RD investments in my Congressional
District of programs that will be highlighted today:
The Punxsutawney Area Hospital in Jefferson County received
about $22 million in USDA Community Facilities Direct Loans for
a renovation and expansion project. I spoke at the
groundbreaking ceremony in April 2024. The new emergency room
was just officially opened in June 2025.
The Cameron County Chamber in Emporium received a Rural
Business Development Grant of $99,000 for their small business
incubator. In conjunction with other funding opportunities,
this will strengthen the local economy and community. I
recently visited this hotbed for future small businesses.
Painterland Sisters in Tioga County were awarded a $216,000
Value-Added Producer Grant to help them create and market new
products in order to increase farm income. By leveraging this
program with other funding streams, sisters Stephanie and
Hayley Painter were able to create a new product: an organic,
lactose-free, Icelandic-style skyr yogurt. Attendees at my 2025
Agriculture Summit in Centre County were able to sample
Painterland Sisters' delicious yogurt.
These are just a sampling of how USDA's RD programs make a
difference in my backyard and in countless rural communities all across
the country.
Mr. Chairman, thank you again for convening this important hearing.
I look forward to continuing our work together to strengthen rural
America.
I yield back.
Mr. Davis. Okay. Our first witness today is Ms. Bette
Brand, who is a former Deputy Under Secretary for Rural
Development at USDA, and our next witness is the Honorable Paul
Heimel, who is a County Commissioner for Potter County,
Pennsylvania Board of Commissioners. Commissioner Heimel is
testifying on behalf of the National Association of Counties.
The Chairman. Our third witness has unimpeachable rural
credentials. She and I served 20 years ago as Board Members on
the South Dakota Rural Development Council, and she has been
working ever since then to make rural communities stronger. It
is my friend, Ms. Lynne Keller Forbes, the Executive Director
of the Southeastern Council of Governments. Ms. Forbes is
testifying on behalf of the National Association of Development
Organizations. And then we also have--oh, they said you get to
introduce Xochitl. That seems unfair. Okay. We are fighting
over----
Mr. Davis. We are fighting over who will introduce you.
The Chairman. Well, I am going to say a couple sentences,
and then you can do the real intro.
[Laughter.]
The Chairman. When you run for Congress, there are a lot
of--you think about a lot of the things that winning may help
you secure. You just don't think about the fact that you are
going to secure some friends once you get elected to Congress,
and, indeed, Xochitl Torres Small is a wonderful person and is
a personal friend, and with that, Mr. Davis, I guess you get
the honor.
Mr. Davis. Oh.
[Laughter.]
Mr. Davis. Well, let me say to a person that is no stranger
to Congress and definitely not a stranger to this Committee
that served our country in so many ways, and a person that
knows where Wilson, North Carolina is, it is so good to see
you.
[Laughter.]
The Chairman. All right. Very good. Thanks to all our
witnesses for joining us today. We are going to proceed to your
testimony. As you all know, you are going to get 5 minutes. The
timer in front of you will count down to zero, at which point
your time has expired. When you hit zero or, we will kind of
tap gently like that. It gets increasingly loud, and Mr. Davis
is particularly heavy handed if you go more than about 15
seconds over. So, with that, Ms. Brand, please begin when you
are ready.
STATEMENT OF BETTE BRAND, FORMER DEPUTY UNDER
SECRETARY, RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE;
PRESIDENT AND CHIEF EXECUTIVE
OFFICER, STRATEGIC CONSULTING LLC, ROANOKE, VA
Ms. Brand. Good morning. Chairman Johnson, Ranking Member
Davis, Vice Chairman Rose, and Members of the Committee, thank
you for the opportunity to testify today about the critical
role that USDA Rural Development plays in strengthening rural
America. My name is Bette Brand, CEO and Founder of Strategic
Consulting LLC in Roanoke, Virginia. Over my career, including
more than 35 years in the Farm Credit System and leadership
roles in USDA Rural Development, my mission has always been the
same: to help agriculture and rural communities thrive.
USDA Rural Development manages more than $200 billion in
loans, guarantees, and grants, delivering over $40 billion each
year to communities of fewer than 50,000 people. These
investments finance hospitals, schools, renewable energy,
broadband, and businesses of every size. Rural Development
programs don't just provide funding. They transform
communities. They are the difference between a hospital staying
open, a small business hiring instead of closing, and a farmer
finding a new market for their products.
Earlier this year, the National Rural Lenders Association
released a landmark assessment of the B&I Loan Guarantee
Program. The findings confirm what rural communities already
know, that these programs work. From 2014 to 2022, the B&I
Program created more than 750,000 jobs in rural America and at
a Federal cost of just $438 per job. Counties with B&I
investment saw sustained employment growth, higher wages, a
stronger GDP per capita for years after the initial investment.
A one percent increase in B&I investment translates into a .55
percent increase in state sales tax revenue, a direct return to
local and state economies.
These are not abstract numbers. They show that Rural
Development programs provide one of the highest returns on
investment of any Federal initiative serving rural America. In
Virginia, the Maryland-Virginia Milk Producers Cooperative used
a B&I Guarantee Loan to purchase and upgrade a processing
facility. Nearly 1,000 dairy farmers benefited, 178 jobs were
retained, and the region kept a vital market for milk, and it
is the Maola brand that many of you in this area may recognize.
In Minnesota, RD financed a $21.6 million public safety
building, ensuring faster emergency response and improved
disaster readiness. In Tennessee, Claybrook Farms used a Value-
Added Producer Grant to launch a branded Angus beef line,
adding jobs and opening new markets. In South Dakota a $27,000
microloan launched Wild Ground Coffee, bringing new life to
main street.
These are examples of how RD meets communities where they
are, whether they are helping a century-old cooperative stay
competitive or giving a startup coffee shop a chance to
succeed. What makes Rural Development unique is that it
combines fiscal responsibility with community resilience. Most
programs leverage private-sector lending, ensuring that
taxpayers' dollars stretch farther and risks are shared. At the
same time, Rural Development programs address areas where the
private market alone cannot carry the full load, like
healthcare access, renewable energy adoption, and critical
infrastructure.
Demand continues to outpace funding. In 2023 and 2024, more
than 90 percent of the B&I Program budget authority was
utilized, the highest on record, demonstrating both efficiency
and an unmet need. Rural Development programs may finance a
hospital, a meat processing plant, or even a coffee shop, but
the purpose is the same: expanding opportunity in rural
America. They have revitalized communities, created and sustain
jobs, modernized essential services, and give farmers and
entrepreneurs the chance to compete and succeed. Most
importantly, they ensure that economic opportunity is not
defined by ZIP Code.
Thank you for your time today and your commitment to rural
America. I look forward to your questions.
[The prepared statement of Ms. Brand follows:]
Prepared Statement of Bette Brand, Former Deputy Under Secretary, Rural
Development, U.S. Department of Agriculture; President and Chief
Executive Officer, Strategic Consulting LLC, Roanoke, VA
Introduction
Chairman Johnson, Ranking Member Davis, Vice Chairman Rose, and
Members of the Committee, Thank you for allowing me the opportunity to
provide testimony on rural America and the programs at USDA that help
improve the economy and quality of life in these important communities.
My name is Bette Brand, CEO and Founder of Strategic Consulting LLC
in Roanoke, Virginia. Strategic Consulting helps entrepreneurs and
business owners access capital for the acquisition or growth of their
business in rural America. Previously, I served as Deputy Under
Secretary for USDA Rural Development, Administrator of the Rural
Business--Cooperative Service, and Acting Administrator of the Rural
Utilities Service. Before USDA, I spent more than 35 years with the
Farm Credit System.
Throughout my career, my focus has been simple: helping agriculture
and rural communities thrive.
The Role of Rural Development
USDA Rural Development (RD) manages more than $200 billion in
loans, loan guarantees, and grants, delivering over $40 billion
annually. These investments strengthen communities of fewer than 50,000
people, helping farmers, families, and entrepreneurs build their future
in rural America.
During COVID, RD proved its flexibility by deploying the B&I-CARES
Act program. This ensured that rural businesses received urgently
needed capital while protecting program integrity. That success led to
new efforts such as the Food Supply Chain Program (included in the
House Agriculture Committee's farm bill with bipartisan support), the
Timber Production Expansion Guaranteed Loan Program, and other
initiatives to support rural America.
Key Programs and Impact
Guaranteed Loan Programs
RD does not lend directly in these programs; it guarantees a
portion of the loan that private/regulated lenders make, sharing the
risk to unlock credit for viable projects. While this has been advanced
by the USDA for many years, RD Guaranteed programs were streamlined in
October 2020 under USDA's OneRD framework. The new rules provided
lenders with one rulebook, resulting in faster processing, more
consistency, and greater opportunities for private lenders (most are
small community banks) to participate, expanding the pool of lenders
who were willing to extend credit to rural businesses.
While many of the Guarantee programs below have not had robust
economic assessments performed on the programs' effectiveness recently,
their impact overwhelmingly supports rural communities providing
resources to support critical infrastructure and services that hold a
community together.
In fact, all programs noted below are like pieces of rural
America's puzzle. Each represents a crucial part of the ``jump-start''
needed to help rural communities thrive. Sometimes one or more pieces
(RD programs) are needed together for a business or community. Often,
other Federal programs like SBA 504 and 7A are also included to make
the project work. In other cases, one piece is needed now, and then the
business or community grows into the next program.
Business & Industry Loan Guarantees (B&I)--Supports rural
businesses by guaranteeing up to 80% of commercial loans in partnership
with private lenders.
Earlier this year, the National Rural Lenders Association retained
Summit. LLC to assess the economic benefits of the Rural Development's
Business and Industry (B&I) Guaranteed loan Program. Through case
studies, B&I programmatic data, and macroeconomic summary statistics,
the report demonstrated many notable positive impacts of the B&I
program, including:
a. From 2014 to 2022, B&I created 757,800 jobs in rural communities.
Each of these jobs only costs the Federal Government $438
to create.
b. Counties with businesses that utilized the B&I program saw
employment increases in the short and long term.
c. Counties that received B&I investment saw a higher increase in
their average earnings per worker for nine (9) consecutive
years after initial investment than similar counties that
did not receive investment.
d. On average, in the years following initial investment, counties
that received B&I investment had higher GDP per capita than
similar counties that did not receive investment.
e. A 1% increase in B&I investment results in a 0.55% increase in
state sales tax revenue.
Generally, Congress has provided significant increases in program
levels of the B&I program from $1.3 billion in 2016 to the 2024 level
of $2.2 billion. With each increase, rural communities have deployed
the capital and sought additional resources with near complete use of
budget authority in 2023 and 2024 (90.83% and 98.24%, respectively),
the highest on record.
In Fiscal Year 2025, The B&I program earned its highest proposed
budget appropriation in program history ($3.5 billion) while holding
its second lowest subsidy rate (.02%).
A direct example of the B&I program at work is in Virginia, where
Maryland-Virginia Milk Producers Cooperative (in business for over 100
years) representing nearly 1,000 dairy farmers was able to purchase and
upgrade a processing facility in November 2023. This allowed them to
expand their product mix and put more money in the farmer/members'
pockets. This project retained 178 jobs, sustained regional dairy
processing, and kept MDVA milk in the market.
Community Facilities Program (CFP)--Finances essential
infrastructure such as hospitals, schools, and emergency services. USDA
reports that between 2005 and 2023, 146 rural hospitals closed or
stopped providing acute inpatient care. Without hospitals nearby,
communities lose physicians, equipment ages without replacement, and
people must travel too far for care. For emergencies, that distance can
mean the difference between life and death.
Equally as important as hospitals are emergency services and
facilities. While firehouses and rescue squads are critical, more
advanced search and rescue and specialized equipment are often needed
to properly respond to vehicle and farm accidents.
In the town of Virginia, Minnesota, RD funded a $21.6
million public safety building in June of 2024. This ADA
compliant regional fire/EMS and police headquarters supports
regional training, disaster operations, and community
education, improving response times, training, and efficiency.
Rural Energy for America Program (REAP)--Funds renewable energy and
efficiency projects for farms and small businesses, often contributing
to the overall success of a B&I project.
In 2021, Webb Farm in Tennessee installed a small solar
panel system, HVAC, and lighting to cut energy costs and boost
resilience.
In Minnesota, Four Daughters Vineyard used a $167,500 grant
to build a solar array, saving $53,000 annually in August 2023.
In 2020, Rural Development took on a huge task to finally unify and
streamline processes across all guaranteed loan programs. This effort
eliminated duplicative processes and introduced a common loan note
guarantee application for four of the largest guaranteed programs
included in this testimony above. This process also standardized
eligibility, origination and servicing provisions, concurrently
improving efficiency, and enhancing customer service.
This process also expanded lender participation by allowing
approval for regulated lenders in good standing to participate in all
the guaranteed programs rather than applying to be an approved lender
in each individual program. The OneRD Rule gives more flexible
collateral and equity requirements that are more in line with standard
lending practices, more flexible loan terms, and clearer Secondary
Market sale requirements.
Additionally, there are now enhanced refinancing options and a
standardized increased guaranty percentage, providing greater
consistency for the lenders. This pushes the lender and the RD credit
committee to have a more critical eye on the project itself rather than
arbitrarily reducing the guarantee amount at the detriment of the
credit.
RD Grant Programs
In addition to the Guaranteed loan programs, the grant programs
often complement the needs of a farmer, small business, or a community
to make the project possible. In other cases, Rural Development Grant
programs give farmer producers or rural communities the boost to get
started. Once their project expands, they often utilize a Guaranteed
loan program.
Value-Added Producer Grants (VAPG)--Helps farmers capture more
income by processing or branding their products with greater value.
Some examples include further processing of milk for a local creamery
or producing lavender lotions and soaps from lavender grown on the
farm. This value-added enterprise usually generates a higher return,
extends the production season, and develops Brand loyalty, all of which
brings more income to the producers.
In Tennessee, Claybrook Farms used a $250,000 grant to
launch a branded Angus beef line, adding 8-10 jobs and opening
new markets.
In South Dakota, a $49,750 grant launched the state's only
on-farm milk bottling line, giving producers direct access to
consumers.
Rural Innovation Stronger Economy (RISE) Grants--Spur high-wage job
creation and regional clusters and builds on the strength of community
collaboration and cooperation.
In Michigan, a $2.1 million RISE award created a multi-
county workforce hub for advanced manufacturing, leading to 125
new jobs and retention of 425 more.
Rural Economic Development Loans and Grants (REDLG)--Provide zero-
interest loans through local utilities who operate in the rural
communities and often see opportunities to improve the quality of life
for residents.
In Minnesota, Redhead Creamery used a $1.5 million loan
through Stearns Electric Association to expand cheese
production and build MN's first whey-based distillery and
tasting room, adding six full-time jobs and new agri-tourism
opportunities in August 2023.
In Tennessee, a $2 million loan financed a USDA-inspected
regional meat processing facility, strengthening livestock
markets and producer incomes.
Cooperative Development Grants--Strengthen farmer co-ops and
marketing alliances. Cooperatives have saved many industries/
communities when private businesses consolidate or move away, leaving
poultry producers, forestry and timber producers, or service providers
without an option to operate.
In Virginia, FAIRS (Foundation for Agriculture, Innovation
and Rural Sustainability) received multi-year support to grow
cooperative marketing across the state.
RD Business Development Assistance
Rural Microentrepreneur Assistance Program (RMAP)--Provides
microloans and technical assistance delivered by local entities to give
a boost to small or start-up businesses.
In Sisseton, South Dakota, a modest $27,000 microloan in
August 2024, through GROW South Dakota helped launch Wild
Grounds Coffee, bringing life back to main street.
Rural Business Investment Program (RBIP)--Provides a license to a
newly formed developmental capital organization to help meet the equity
capital needed in rural communities. The equity raised by these
licensed funds then makes venture capital investments to eligible rural
enterprises or start-ups.
In Virginia, Soli Organic scaled its indoor agriculture
operations with RBIP-backed investment. Recently, Soli Organic
and 80 Acres Farms--both USDA-supported--merged to create one
of the largest indoor farming networks in the world.
In Tennessee, the Innova Ag Innovation Fund II is investing
$31 million to commercialize ag-tech across the Mid-South,
supporting up to 2,000 high-wage jobs.
Conclusion
Rural Development programs may look different--financing a
hospital, building a meat processing facility, or helping a coffee shop
get off the ground--but they all share one purpose: expanding
opportunity in rural America. They revitalize communities, create and
sustain jobs, build critical infrastructure, and provide farmers and
entrepreneurs with the tools needed to succeed. Most importantly, they
ensure that quality of life and economic opportunity are not defined by
ZIP Code.
Thank you for your time, and I look forward to your questions.
Attachment
USDA B&I Guaranteed Loan Program: Economic Assessment, 2025
Prepared by: Summit, LLC 777 6th St. NW, Suite 520 Washington, DC 20001
D www.summitllc.us
Table of Contents
Executive Summary
Program Overview
Introduction to USDA Rural Development
USDA's B&I Guaranteed Loan Program
One Rural Development Guaranteed Loan Initiative
Private-sector participation in the B&I Loan Guarantee Program
Case Studies
Champagne Energy and Environmental Solutions: Local business growth
Commongrounds Cooperative: Building community in Traverse City
Secure Semiconductor Manufacturing: Returning semiconductor
manufacturing jobs to rural America
The Inn at Bellefield: Integrating community and hospitality
B&I Programmatic Data
B&I program funding overview
B&I concentration by sector
Geographic distribution of loan guarantees
Program financials: Allotments, obligations, and subsidy rates
Macroeconomic Summary Statistics
Employment rises in both the short run and long run
Counties that receive investment see a positive effect on earnings
Counties that receive investment see a positive effect on GDP
State-level analysis: Positive impact of B&I on sales and taxes
Assessment Methodology: Brief Overview
List of tables
Table 1: Core B&I NAICS Industry snapshot: Fiscal Years 2019, 2023,
and 2024
Table 2: 2015-2024 core B&I Program: Top ten states by total
obligation amount
Table 3: State comparison: Obligation percentage by sector, 2015-
2024
Table 4: Congressional district comparison: Obligation percentage
by sector, 2015-2024
Table 5: Allotments, obligations, and use rates, 2015-2025
Table 6: Estimated number of jobs created
Table 7: Summary of jobs created
Table 8: Job created: cost to the government
Table 9: Summary of cost to the government
Table 10: Overview of assessment methodologies
List of figures
Figure 1: B&I program loan performance overview 2015-2024
Figure 2: Total project costs of core B&I projects from Fiscal
Years 2005-2024
Figure 3: 2015-2024 core B&I investment amount by NAICS industry
Figure 4: State B&I loan guarantee obligation amount per capita
Figure 5: B&I program loans in zip codes containing Opportunity
Zones are increasing
Figure 6: B&I loan program subsidy recent history
Figure 7: Average earnings per worker for counties that received
investment and matched counties that did not receive investment
Figure 8: Average GDP per capita for counties that received
investment and matched counties that did not receive investment
Figure 9: Average GDP for counties that received investment and
matched counties that did not receive investment
Figure 10: Log of state sales income tax collected plotted against
log of B&I investment
Executive Summary
Summit was retained by the National Rural Lenders Association
(NRLA) to assess the economic benefits of the U.S. Department of
Agriculture (USDA) Rural Development's Business and Industry (B&I)
Guaranteed Loan Program. The B&I program aims to increase business
capital access through loan guarantees and improve economic prospects
in rural communities. While the government's subsidy cost is known,
NRLA aimed to define the program's economic benefits and establish
return on investment.
Summit conducted over 20 interviews with subject-matter experts,
lenders, packagers, borrowers, and Federal credit managers and
leadership; conducted a wide literature review; and employed
qualitative and quantitative (econometrics) research methods to assess
program outcomes and impacts. At the most granular level (project case
studies), B&I programmatic level, and macroeconomic level, we find a
program with positive momentum and impact, as well as versatility to
meet Administration priorities.
Case studies. In the first section, we highlight four projects
across the country and in different asset classes, which contain tried-
and-true results before and after loan origination. We find that the
B&I program incentivizes projects that would not otherwise be built
with traditional commercial credit. B&I rates, terms, and conditions
were not only attractive but also necessary to encourage business
innovation and expansion with outsize impacts on rural America.
``Tombstone data,'' or credit memo intentions, are proven in economic
measures such as jobs, wages, and companies' financial growth.
Programmatic data. Next, we display USDA Rural Development B&I-
specific programmatic data over the past decade. We find a program on
the move, running increasingly more efficient and easily customizable
to meet manufacturing, agricultural, and other industry business needs
across rural America. In Fiscal Year 2025, the B&I program earned its
highest allotment in program history ($3.5 billion) while holding its
second lowest subsidy rate (0.2%). Other highlights include:
B&I loans in Opportunity Zones have increased 59.29% from
2018 to 2025.
From 2005 through 2024, B&I leveraged an additional $12.4
billion in other capital, such as commercial debt, private
equity, and tax credits.
Total core B&I loans increased from 2015 to 2024 by 108%.
Total B&I allotment use in 2023 and 2024 was 90.83% and
98.24%, respectively, the highest on record.
Macroeconomic statistics. Finally, we cite the findings of our
macroeconomic analysis, focusing on jobs, earnings, gross domestic
product (GDP), and tax benefits. For example, the B&I program created
more than 750,000 jobs from 2012 to 2022, costing the Federal
Government $438 per job. We also find a positive correlation between
B&I investment and other economic outputs:
Counties that receive B&I loans have higher GDP per capita
and GDP than those without.
Counties that receive B&I loans earn more per worker than
counties that do not.
A 1% increase in B&I loans results in a 0.55% increase in
sales tax revenue for the average state in the long run.
Based on historical evidence and predicated on persistent funding
levels we would expect to see similar positive economic impacts of the
B&I program moving forward.
Program Overview
What is the USDA Business and Industry Guaranteed Loan Program?
------------------------------------------------------------------------
------------------------------------------------------------------------
8Business and Industry loan guarantees improve the economic health
of rural communities by increasing business capital access and enabling
affordable financing for rural businesses.0
------------------------------------------------------------------------
Rural businesses can use the loans to pay for:
Enlarging, repairing, modernizing, or developing
businesses;
Purchasing and developing land, buildings, and associated
infrastructure;
Purchasing and installing machinery, equipment, supplies,
or inventory;
Refinancing debt when refinancing improves cash-flow and
creates jobs; and
Acquiring businesses to maintain business operations and
create or save jobs.
------------------------------------------------------------------------
8Eligible lenders:0 6Eligible borrowers:0
8Federal and state- 6For-profit and
chartered banks0 nonprofit businesses0
8Savings and loan 6Cooperatives0
institutions0
8Farm Credit Banks 6Federally recognized
with direct lending authority0 Tribes0
6Public bodies0
8Credit unions0 6Individuals engaged or
8Nonregulated lenders planning to engage in a
may be approved under the business0
OneRD Guaranteed Loan 6Individual borrowers
Initiative regulation0 must be U.S. citizens or
legally admitted permanent
residents0
------------------------------------
Lenders can be located anywhere in 6Private-entity
the United States borrowers must ensure loan
funds stay within the U.S. and
that financed facilities
primarily create or retain
rural jobs0
------------------------------------------------------------------------
Eligible areas:
Rural areas outside cities or towns with populations of
50,000 or less
Borrower headquarters can be in a larger city if funded
project is in an eligible rural area.
------------------------------------------------------------------------
6Loan details:0
4Rates0 4Negotiated between
lender and borrower0
4Can be fixed or
variable0
6Terms0 6Cannot exceed 40
years0
6Determined by lender
and USDA based on loan purpose,
asset life, and repayment
ability0
4Guarantee amount0 4Guarantee percentages
are published annually in the
Federal Register0
4FY 2025: 80%
guarantee0
6Fees0 6Initial guarantee fee:
3% of guaranteed loan amount0
6Annual renewal fee:
0.55% of guaranteed portion of
outstanding balance0
6Reasonable loan
origination fees negotiated
between lender and borrower0
6Some qualifying
projects may receive a reduced
fee of 1%0
4Benefits0 4Offers loan amounts
exceeding $5 million for large
rural business needs0
4Provides fully
amortized terms with no balloon
payments for stable cash-flow0
4Allows flexible use of
proceeds, including real
estate, equipment, working
capital, and refinancing0
4Government guaranteed
loan provides creditability and
project momentum0
------------------------------------------------------------------------
Introduction to USDA Rural Development
USDA's Rural Development (RD) plays a pivotal role in fostering
opportunity and economic security in rural America and improves the
quality of life in rural communities across the United States. Through
a variety of loan, grant, and guarantee programs, USDA RD facilitates
access to capital for rural enterprises that may otherwise struggle to
secure financing from traditional lending institutions. RD is committed
to strengthening rural economies through business financing and
technical assistance; expanding access to critical infrastructure such
as broadband, energy, water, and healthcare; promoting sustainable
agricultural and nonagricultural business ventures to diversify rural
economies; and supporting job retention and creation to reduce economic
disparities in rural communities.
The Business and Industry (B&I) Guaranteed Loan Program was
introduced in 1972 to provide credit enhancements for rural businesses
through private lenders. In 1994, USDA lending and grant programs were
consolidated under the new RD mission area, integrating business,
housing, and utility programs. From 2008 to 2020, RD initiatives
further expanded to include vertically integrated agriculture,
renewable energy financing, mixed use development (so long as primary
purpose is commercial), and targeted efforts to address economic
distress in under-served rural areas. This reflects a shift from direct
government lending toward credit enhancement mechanisms, encouraging
private lender participation.
USDA RD administers a variety of loan and grant programs, including
Rural Energy for America, Rural Business Development Grants, Community
Facilities Loans and Grants, and Water & Environmental Programs. The
B&I program is the flagship in the Rural Business--Cooperative Service
(RBCS), making up roughly 50% of loan/grant obligation amounts in
dollars.
USDA's B&I Guaranteed Loan Program
The B&I program is designed to stimulate economic growth in rural
communities by improving access to private capital and mitigating
lending risks. Established under the farm bill and periodically
reauthorized, the program supports rural businesses, nonprofits,
cooperatives, Tribal organizations, and some publicly owned entities.
Eligible loan purposes include business acquisition, expansion,
equipment purchases, working capital, and debt refinancing across a
wide expanse of sectors (and subsectors)--e.g., battery energy storage
systems (aiding electric power generation fed by both renewable and
fossil fuels), timber products (e.g., mass timber and other engineered
wood), and skilled trade schools (e.g., pipe welding). To qualify, the
project must be in a rural area with a population under 50,000.
The program offers advantages including reduced lender risk through
the loan guarantee, greater investment in undercapitalized rural
markets, and economic stability during downturns. Borrowers benefit
from more favorable loan terms than conventional financing, with fully
amortized loans and no balloon payments. Loan amounts range from
$200,000 to $25 million, with up to 80% guaranteed. Interest rates are
fixed or variable (adjustable no more than quarterly), and fees include
a 3% initial guarantee fee and a 0.5% annual retention fee on the
outstanding guaranteed balance.
Collateral must be sufficient to protect the interests of both the
lender and USDA, with appropriate valuation and hazard insurance.
Lenders are responsible for credit evaluations to address any credit
risks and demonstrate that loan terms support full repayment.
Compliance requirements include regular financial and performance
reporting by borrowers, while lenders monitor active borrowers.
One Rural Development Guaranteed Loan Initiative
In 2021, the One Rural Development (OneRD) Guaranteed Loan
Initiative unified all of RD's guaranteed loan programs. As part of
this effort, RD implemented fewer and more streamlined application
forms and standardized processes and credit reviews with the promise of
faster approval timelines. To expand the impact of loan guarantee
programs, RD enhanced lender participation incentives and expanded
outreach efforts to institutions serving under-served communities.
The OneRD Guaranteed Loan Initiative introduced the following
featured benefits and policy changes:
A single standardized regulation for USDA RD programs: B&I,
Community Facilities Programs, Rural Energy for America
Program, and Water and Environmental Programs.
Single-point lender approval, certification options, and
secondary sale/purchase guidance.
Standardized forms and annual notices with program terms at
the start of each fiscal year.
Possibility of guarantee issuance prior to construction and
ability to use funds for refinancing.
Establishment of consistent population limits across B&I
programs.
The OneRD initiative also included several changes to the B&I
program terms, increasing the guaranteed amount to 80% as the standard
for all loan sizes, including emerging industries such as rural
technology businesses, enhancing creditworthiness evaluation criteria,
and adjusting terms based on recessionary trends or inflationary
pressures. OneRD has also led to increased analysis of the USDA loan
guarantee portfolio; the Rural Data Gateway provides insight into B&I
loan guarantee obligations from 2012 through 2024.
Private-Sector Participation in the B&I Guaranteed Loan Program
The success of the B&I program hinges on participation from
private-sector lenders, who originate and service the loans. Lenders
engaging in the program range from small community-based banks to large
regional banks and nontraditional lenders. Community banks and regional
banks in rural and small-town markets are among the most active
participants, as they have local business customers who need credit.
Lenders are drawn to the B&I program by its risk mitigation. The
guarantee significantly reduces credit risk by covering most losses,
allowing banks to make loans that would otherwise exceed internal
lending limits or risk tolerance. The program can help lenders serve
their communities and meet Community Reinvestment Act goals, as loans
to rural businesses under a Federal guarantee can qualify as supporting
economic development. The presence of an active secondary market is
another incentive: lenders often sell the guaranteed portion of the
loan to investors, which provides immediate income and frees up capital
to make more loans. The guaranteed portions are fully backed by the
government and therefore carry a zero-risk weighting for bank capital
purposes, making them attractive assets to hold or sell.
While B&I loan guarantee activity has increased, the number of
participating lenders has decreased, which may lead to geographic
risks. USDA should continue to educate financial institutions about
program benefits for borrowers and institutions, to ensure rural
businesses have access to financing.
Case Studies
Champagne Energy and Environmental Solutions: Local Business Growth
i Founder Robert Champagne describes the B&I loan as ``a
hand up, not a handout.''
A hand up for growth. Champagne Energy and Environmental Solutions
(CEES) is a subsea construction company working in the Gulf of America.
With the B&I loan program, CEES' revenue has grown from $1.8 million in
2008 to $110 million today. The loan's low amortization enabled CEES to
offer a competitive day rate and purchase new vessels, which reduced
long-term maintenance costs.
Ensuring future market competitiveness. CEES lays oil and gas
pipelines, removes decommissioned pipelines, and lays power cables for
offshore windmills. The company is now considering expanding to support
companies building subsea data storage facilities. As founder Robert
Champagne says, ``I don't care who's in [Federal] office. Whatever you
want to do, I can adapt. We can make it work.''
Keeping jobs local. As one of only two American companies that can
do shallow-water work in the Gulf, CEES is fending off international
competitors and keeping jobs in the U.S. With B&I support, CEES has
doubled wages and the number of local jobs between 2016 and 2025. The
loan also enabled CEES to maintain its long-standing relationship with
United Community Bank.
The company has more than doubled jobs and average wages from 2016
(97 total jobs and $14.50 average hourly wages) to today (300 total
jobs and $30 average hourly wages).
------------------------------------------------------------------------
------------------------------------------------------------------------
Impacts Jobs: 97 in 2016; Wages: $14.50/hr Revenue: $1.8
265 in 2025 (avg) in 2016; million in
$30/hr (avg) in 2008; $110
2025 million in 2024
------------------------------------------------------------------------
Commongrounds Cooperative: Building community in Traverse City
An innovative, community-owned center. Commongrounds Cooperative is
a community-owned, mixed-use community center in Traverse City,
Michigan. Supported by over 1,100 community owners, the cooperative
brings together affordable workforce housing, mission-driven
organizations, and common areas. The emphasis on local community-
building is clear in co-executive director Kate Redman's message to
community owners: ``Don't just invest in Wall Street, invest in 8th
Street.''
The B&I loan guarantee was the solution to a complex funding stack.
Commongrounds relied on investment crowdfunding to raise project equity
for construction, which created a complex funding structure. The $8
million loan was too risky for local credit unions, and no investor
could guarantee the loan. Redman describes navigating the financial
structure as the most challenging aspect of development. Ultimately,
the B&I loan guarantee was critical in bringing Commongrounds to life.
i Co-executive director Kate Redman says the B&I loan
guarantee was ``critical to our project being . . . possible.''
A focus on community needs. From the beginning, Commongrounds has
focused on the community. Early community input emphasized the
importance of central social infrastructure, leading to the inclusion
of affordable workforce housing near the city center, a teaching
kitchen offering health-focused cooking classes, and a popular
performing arts venue.
------------------------------------------------------------------------
------------------------------------------------------------------------
Impacts 100% occupied 7 commercial or 25% of housing
nonprofit priced at 60%
tenants AMI
------------------------------------------------------------------------
Secure Semiconductor Manufacturing: Returning semiconductor
manufacturing jobs to rural America
i ``We're now [going to] produce much, much, much more than
we ever dreamed we could . . .''
Financing rapid growth in semiconductor manufacturing. Secure
Semiconductor Manufacturing, LLC (SSM) is a semiconductor manufacturer
in rural Coffey County, Kansas. Created to meet U.S.-based secure
electronics production needs, SSM saw an opportunity with the B&I
Guaranteed Loan Program to grow larger than planned. The B&I program
supported the purchase of large manufacturing equipment; new
capabilities are coming online soon and SSM already has a waiting list
of customers.
Good, local jobs in rural Kansas. As staffing needs grow, SSM
maintains an emphasis on hiring locally in rural Neodesha, Kansas. As
CEO Bart Massey says, it's just good business sense: ``I told them I'd
work them until their fingers bled before I hired anybody else . . .
We're hiring people for longevity.'' SSM jobs offer paid training and
immediate benefits, and aims to double staff by the end of 2025.
Repatriating semiconductor manufacturing to the U.S. As Massey
notes, the number of chip manufacturers in the U.S. has fallen to a few
hundred, from a high of over 4,000 in the 1980s. SSM emphasizes
American-made, with no components sent to China or other countries for
production, meeting Federal and private customer needs for a more
secure, American-only production standard.
------------------------------------------------------------------------
------------------------------------------------------------------------
Impacts Leverages 45% in Doubling staff 100% American
other capital by 2026 investment
------------------------------------------------------------------------
The Inn at Bellefield: Integrating community and hospitality
Financing a promising hotel venture. The Inn at Bellefield in
historic Hyde Park, New York, offers a premium hotel experience. The
Shaner Hotel Group saw great potential in the town's historic charm.
Development challenges included the building of a wastewater treatment
facility and the cost of aligning with local historic design
guidelines. The B&I loan guarantee covered nearly half of the over $50
million project costs, enabling development of a hotel that integrates
local design, food, beverage, and art.
Marriott-branded, locally owned. As a flagship Marriott hotel, the
Inn at Bellefield enjoys the benefits of the Marriott brand name while
remaining locally owned and operated. This allows the inn to leverage
Marriott's reservation system and extensive network of over 200 million
reward members. While the branded name helps drives customers to the
hotel, Shaner's Derrick Skillings says, ``When you walk into the lobby,
you would not know this is a Residence Inn.'' The bar, crafted from a
200 year old sycamore tree on the property, underscores the local
connection at the heart of the hotel.
i ``How many Residence Inns have an executive chef?''
A community multiplier. The hotel design ``[ties] back to the
regional history and agriculture of Hyde Park.'' The executive chef
sources food and beverages from local vendors, while local wines and
products are showcased in the lobby. The full-service restaurant means
the hotel employs 40 to 50 staff; higher than the typical 30. The hotel
also has a multiplier effect on the community by hosting events like
conferences and weddings, bringing in business for caterers, florists,
and other business owners. This integration of local elements supports
the community and enhances the guest experience.
------------------------------------------------------------------------
------------------------------------------------------------------------
Impacts 12-15 local 40-50 employees 2025
vendors Forecasting:
55,000+ guests;
$7M+ revenue
------------------------------------------------------------------------
B&I Programmatic Data
B&I program Funding Overview
i Total core B&I obligations increased from 2015 to 2024 by
108%. $1.81 billion, $1.60 billion, $1.86 billion, and $1.80
billion in obligations were made in 2021, 2022, 2023 and 2024,
respectively, the four highest core B&I obligation amounts in
program history.
B&I loan obligations have totaled $13.4 billion from Fiscal Years
2015 through 2024. Figure 1 below includes core 1% and 3% B&I program
obligations and omits American Recovery and Reinvestment Act,
coronavirus relief, and other one-off B&I programs. Sixty percent of
the total B&I obligations in the period have occurred in the past 5
years. The average loan size has also increased significantly during
the past 5 years, with a $2.75 million loan guarantee amount per loan
in 2015, growing to a $8.1 million average loan amount in 2024.
Figure 1: B&I program loan performance overview 2015-2024
i From 2005 through 2024, the B&I program has leveraged an
additional $12.4 billion to complement B&I financing such as
commercial debt, private equity, and tax credits.
Figure 2 below shows a longer timeline, Fiscal Years 2005 through
2024, of core B&I financing and the total project amounts funded by the
loan guarantees. During this period, obligation amounts have increased
significantly. B&I projects have totaled over $33.9 billion, with $21.5
billion funded by B&I loans. Applicants have successfully leveraged
credit, private equity, and even other Federal programs such as the New
Market Tax Credits, Rural Energy for America, and Rural Energy Savings
funding. For example, Aviva Health, a nonprofit Federally Qualified
Health Center, utilized B&I funding and New Market Tax Credits together
to expand their Umpqua, Oregon facility to accommodate a new medical
residency program. Overall, the B&I program is not only critical to
business growth in rural America, but also a catalyst of investment
into rural businesses and communities.
Figure 2: Total project costs of core B&I projects from Fiscal Years
2005-2024
B&I Concentration by Sector
The B&I program serves businesses across a broad spectrum of
industries, reflecting the diverse rural economy. Analyzing the
portfolio by sector reveals which industries have been the primary
beneficiaries of the guarantees. Traditionally, accommodations and food
services and manufacturing received a substantial share of B&I loan
dollars. Rural B&I-eligible areas are well suited for tourism and
recreation, so many borrowers have successfully financed hotel
projects--which enhance access to rural America's recreational assets--
and restaurant projects with B&I financing. Investments in
accommodations and food services and manufacturing represent a
significant share of total financing from 2015 to 2024, totaling nearly
$4 billion and $2.3 billion, respectively.
i B&I loans have been obligated across 21 NAICS sectors and
90 unique subsectors, highlighting the program's broad industry
reach.
A closer look at year-over-year shifts in other sectors illustrates
the flexibility of the program. B&I obligations for utilities totaled
$992 million from 2015 to 2024, with $603 million obligated from 2020
to 2024, including peak obligations of $170 million in 2021. Mining,
quarry, and oil and gas businesses received $294 million in 2023,
representing 38% of the sector's $772 million in total obligations from
2015 to 2024. Rural manufacturing plants, whether producing auto parts,
machinery, building materials, or food products, often require
significant capital for facilities and equipment, which the B&I program
has been instrumental in financing.
Numerous food and agriculture processing projects have used B&I
guarantees (such as grain milling operations, meat processing
facilities, and dairy production plants), aligning with USDA's emphasis
on adding value to agricultural commodities locally. The healthcare
sector is another significant area: rural hospitals, clinics, and
eldercare facilities (nursing homes, assisted living) have obtained
B&I-guaranteed financing, particularly when other USDA Community
Facilities funds were not available or when the project had a private
ownership structure. These healthcare projects can be critical for
rural community viability and often have sizable loan needs such as
construction of new clinics or hospital expansions.
Figure 3: 2015-2024 core B&I investment amount by NAICS industry
The B&I Guaranteed Loan Program is well positioned to adapt and
change based on Administration priorities. Table 1 below shows a
snapshot of percentage loan levels in years 2019, 2023, and 2024. The
snapshot shows significant year-over-year variability in the utilities;
the mining, quarrying, and oil and gas extraction; and agriculture,
forestry, fishing, and hunting sectors. A notable example of B&I impact
in a manufacturing subsector, distilleries, is Jackson Purchase
Distillery LLC in Fulton, Kentucky, which received multiple B&I loans
in 2023 and 2024 to expand its contract distilling operations through
new rick houses, a still, fermenter building, and grain handling
systems, creating an estimated 25 jobs in a designated Persistent
Poverty area. Obligations outlined below can be further classified into
distinct subsectors, such as agriculture, forestry, fishing, and
hunting, which includes the subsectors of animal production and
aquaculture; crop production; fishing, hunting, and trapping; forestry
and logging; and support activities for agriculture and forestry,
showing the program's broad and diverse economic impact.
Table 1: Core B&I NAICS Industry snapshot: Fiscal Years 2019, 2023, and
2024
------------------------------------------------------------------------
Sector 2019 2023 2024
------------------------------------------------------------------------
Accommodation and food services 35.48% 36.54% 32.06%
Manufacturing 20.37% 15.15% 18.48%
Utilities 9.05% 3.44% 10.54%
Health care and social assistance 5.55% 5.70% 6.73%
Real estate and rental and 8.25% 5.47% 3.28%
leasing
Mining, quarrying, and oil and 5.00% 15.76% 5.66%
gas extraction
Agriculture, forestry, fishing, 0.65% 4.63% 4.88%
and hunting
Retail trade 2.98% 3.54% 3.03%
All other sectors 12.68% 9.78% 15.35%
------------------------------------------------------------------------
Geographic Distribution of Loan Guarantees
The administration of B&I funds across the United States is
geographically broad, reaching virtually every state and territory with
eligible rural areas. Regional patterns in program usage have emerged
given the prevalence of rural industries and the presence of
participating lenders. Table 2 shows the top ten states by loan
guarantee obligation amount for core B&I programs from 2015 to 2024.
Leading B&I states include those with one or more of the following:
high populations, significant proportion of population in rural areas,
or substantial levels of business activity including tourism, oil and
gas, manufacturing, and agriculture.
Table 2: 2015-2024 core B&I Program: Top ten states by total obligation
amount
------------------------------------------------------------------------
Number of Loan
State Obligation Amount Guarantees
------------------------------------------------------------------------
North Carolina $957 M 200
Louisiana $926 M 122
Texas $838 M 97
Florida $762 M 143
Oklahoma $665 M 130
California $658 M 133
Arizona $485 M 83
Missouri $481 M 269
Kentucky $470 M 74
Oregon $438 M 108
------------------------------------------------------------------------
B&I financing has had a higher per capita impact in rural states
with lower population density and high amounts of business activity,
including in oil and gas, energy exploration, and manufacturing.
Alaska, Wyoming, and Louisiana lead states in B&I loan guarantee amount
per capita. The bottom per capita states include more urban and
suburban areas, primarily in the northeastern corridor and New England,
including New Jersey, Connecticut, and Massachusetts. Figure 4 shows
the per capita B&I obligation amount from 2015-2024. The top and bottom
five states for per capita investment during this period include labels
and per capita amounts.
Figure 4: State B&I loan guarantee obligation amount per capita
Powered by Bing.
GeoNames, Microsoft, TomTom.
Businesses have used B&I loan financing across a broad spectrum of
sectors and industries. By examining B&I loan guarantee percentage by
sector across states and Congressional districts, we can see the
program is adaptable to regional economic priorities. USDA uses B&I as
a flexible intervention for economic development in rural areas. In
addition, USDA can designate creditworthy and economically stimulating
projects as high priority through its application scoring system. Each
Administration can use the program to fund sectors that will most
benefit rural America. Table 3 and Table 4 below show the differing
sector utilization of the B&I program across states and Congressional
districts from Fiscal Years 2015 through 2024. Michigan and
Pennsylvania's Congressional district 15, a north-central district in
the state, have used B&I financing in hotels, motels, resorts, bed and
breakfasts, campgrounds, restaurants, cafes, and bars. Alabama and
North Carolina's Congressional district 1 (CD1), an inland district in
the northeast portion of the state, received the most B&I financing in
manufacturing and utilities sectors, respectively. Both Alabama and
North Carolina's CD1 also show significant investment in health care.
i Sector concentration of B&I investments can vary
significantly across states and Congressional districts,
meeting the customized business needs of specific rural
populations across the United States.
Table 3: State comparison: Obligation percentage by sector, 2015-2024
------------------------------------------------------------------------
------------------------------------------------------------------------
Michigan Alabama
------------------------------------------------------------------------
Accommodation and food 58.57% Manufacturing 26.93%
services
Real estate and rental 15.68% Health care and 18.82%
and leasing social assistance
Arts, entertainment, 6.09% Agriculture, 18.42%
and recreation forestry, fishing
and hunting
Manufacturing 5.83% Information 9.91%
Retail trade 3.61% Real estate and 9.56%
rental and leasing
Other sectors 10.22% Other sectors 16.35%
------------------------------------------------------------------------
Table 4: Congressional district comparison: Obligation percentage by
sector, 2015-2024
------------------------------------------------------------------------
------------------------------------------------------------------------
Pennsylvania--CongressionalNorth Carolina--Congressional
15 District 1
------------------------------------------------------------------------
Accommodation and food 40.47% Utilities 52.10%
services
Agriculture, forestry, 26.43% Health care and 24.02%
fishing, and hunting social assistance
Manufacturing 21.59% Manufacturing 12.40%
Other sectors 11.51% Other sectors 11.48%
------------------------------------------------------------------------
i Overall B&I investment into [ZIP Codes] containing
Qualified Opportunity Zone census tracts have increased 59.29%
from 2018 to 2025.
Opportunity Zones were created under the Tax Cuts and Jobs Act of
2017, an economic development tool that allows for increased
investments in distressed areas by providing tax benefits to investors.
The [A]ct designated 8,764 low-income communities and certain
contiguous communities, tracked at the Census tract level, as Qualified
Opportunity Zones. From 2018 onward, the B&I program has shown
increased investment in Opportunity Zones. As of 2018, approximately
31.3 million people in the 50 states, not including U.S. territories,
lived in areas designated as Opportunity Zones. Figure 5 shows the
percentage of total B&I obligations, including COVID-related B&I
programs, that have been made in [ZIP Codes] containing census tracts
designated as Qualified Opportunity Zones. A significant proportion of
investments have been made in areas that may benefit low-income
populations directly via increased employment, or indirectly through
increased economic activity.
Figure 5: B&I program loans in [ZIP Codes] containing Opportunity Zones
are increasing
Program Financials: Allotments, Obligations, and Subsidy Rates
i Usage of total B&I allotments in 2023 and 2024 were 90.83%
and 98.24%, the highest on record. Usage of Total B&I
allotments increased from 53.99% in 2020 to 98.24% in 2024.
On an annual basis, Congress provides budget authority for USDA RD,
which determines how many loans can be made for the budget year. This
is often set in appropriation acts or via the authorized amount in the
farm bill, subject to annual budget decisions. Given that B&I is a
guaranteed program, the budget authority primarily covers the credit
subsidy amount of the loan guarantees and program administration. The
B&I program historically has the largest appropriations and highest
utilization rate amongst RD guaranteed programs.
The percentage usage of total B&I allotments increased steadily
from 2020 through 2024. In fact, the B&I program would have used 100%
of allocations in 2024, if not for the recapture of de-obligated funds
at fiscal year-end. The B&I program allotments were $1.77 billion,
$2.05 billion, and $1.83 billion for Fiscal Years 2022, 2023, and 2024,
respectively. The program was appropriated $3.5 billion in Fiscal Year
2025, the highest ever when adjusted for inflation.
Table 5: Allotments, obligations, and use rates, 2015-2025
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
----------------------------------------------------------------------------------------------------------------
Allotments (in $1,232 $1,778 $1,502 $1,224 $1,374 $2,530 $2,737 $1,778 $2,050 $1,831
millions)
Total B&I obligations $864 $1,060 $1,177 $1,054 $1,116 $1,366 $2,307 $1,598 $1,862 $1,799
(in millions)
Core B&I obligations $864 $1,052 $1,177 $1,053 $1,116 $1,058 $1,807 $1,598 $1,862 $1,799
(in millions)
Total usage 70.16% 59.60% 78.39% 86.15% 81.26% 53.99% 84.28% 89.89% 90.83% 98.24%
Core B&I usage 70.12% 59.15% 78.33% 86.07% 81.26% 41.82% 66.01% 89.89% 90.83% 98.24%
----------------------------------------------------------------------------------------------------------------
i The overall subsidy rate for the B&I loan guarantee
program has decreased significantly during the past decade,
with the 2025 subsidy rate being the second lowest on record at
0.2%. In other words, It costs the government 20 for every
$100 of lending.
The subsidy rate is a critical financial aspect of any Federal loan
guarantee program, as it measures the estimated cost to the government
of extending the guarantees. For the B&I program, USDA and the Office
of Management and Budget calculate this rate based on the projected
long-term losses (defaults net of recoveries) and expenses, minus any
fees collected. In formulaic terms, the subsidy cost considers the
probability of default on guaranteed loans, the portion of each loan
that will be lost given default (after collateral liquidation), the
timing of these defaults, the discount rate (interest rate) used to
calculate estimate present value costs, and the fee income (initial and
annual fees) that the government receives. Recent revision of program
fees under OneRD, diligent underwriting processes, and strong portfolio
risk management practices have contributed to the reduction of total
B&I subsidy rate over time. Figure 6 shows the default subsidy cost,
fee subsidy offset, and total subsidy of the B&I program from 2015
through 2025.
Figure 6: B&I loan program subsidy recent history
Between Fiscal Years 2015 and 2024, the USDA paid approximately
$501.6 million in loan losses under the core B&I program. The bulk of
losses are concentrated in loans likely obligated between pre-2012,
2013 and 2015, underscoring the long tail of loss exposure from those
cohorts. While obligation year attribution for some older losses is
incomplete, the claim data still highlight a general pattern: losses
from newer cohorts have steadily declined in recent years, with average
annual losses from 2021 to 2024 totaling just under $30 million,
compared to peak years like 2016 and 2018, which each saw over $70
million in losses. The large share of losses linked to suspected pre-
2012 obligations underscores the program's momentum and attention to
sound underwriting practices.
i The B&I program was appropriated $3.5 billion in FY 2025,
the highest in program history. Combined with its second lowest
subsidy rate, the program is well positioned to benefit rural
American businesses.
Overall, the B&I program has seen a significant reduction in
program total subsidy rate, driven primarily by reduced default
assumptions in the program's annual modeling. The B&I program is well
positioned to make a significant impact in rural America with a lower
cost of financing to the taxpayer.
Macroeconomic Summary Statistics
i Counties that received USDA B&I investment experienced
employment growth over several years. It cost the Federal
Government an estimated $438 per job created by the B&I program
from 2012 to 2022.
To quantify the economic impact of the B&I program on a macro
level, we assessed the impact of B&I investment on employment,
earnings, gross domestic product (GDP), and taxes. We find that the
USDA B&I Guaranteed Loan Program has had a positive impact on all four
key macroeconomic variables and that the impact extends past the year
of investment. There are also differential impacts across states and
counties; based on certain conditions, the impact grows progressively
over time. Based on regression analysis, counties that receive B&I
investment saw employment gains of approximately 200,000 in the short
run (same year as investment), and approximately 750,000 in the long
run (first 3 years after investment) in our sample. Conditioning on GDP
per capita, we find that counties that receive B&I investment also
observe a rise in both earnings and GDP. At the state level, we find
that a 1% increase in B&I investment increases taxes collected by 0.55%
in the long run.
We use a variety of econometric and statistical techniques to
quantify the economic impact of the USDA B&I Guaranteed Loan Program.
For employment, we want to highlight the short-run and long-run
implications over a 3 year period of the program, and we use regression
techniques to quantify these effects. For earnings and GDP, mapping
counties that receive B&I investment with counties with similar GDP per
capita that did not receive B&I investment allows us to determine how
earnings and GDP for counties that receive B&I investment have risen
over time. Finally, to quantify the impact on tax revenue, we perform
econometric analysis at the state level (as opposed to county level),
as this is the lowest level of aggregation for which comparable sales
tax data is available for the United States.
Employment Rises in Both the Short-Run and Long-Run
We obtained county-level annual employment data for 2001 through
2022 from the U.S. Bureau of Economic Analysis \1\ (BEA) and loan-level
B&I investment data for 2012 through 2022 from the USDA Rural Data
Gateway portal.\2\ Loan amounts are aggregated to obtain the total
amount invested into each county for each year. This is merged with
employment data at the county level, and employment growth rates are
annualized. The data are filtered to include only counties that
received investment at least once between 2012 and 2022.
---------------------------------------------------------------------------
\1\ https://www.bea.gov/itable.
\2\ https://www.rd.usda.gov/rural-data-gateway.
---------------------------------------------------------------------------
We then estimate an ordinary least squares regression with annual
employment growth as the dependent variable and the investment amount
in the current year, the previous year, and 2 years prior as the key
independent variables. We include time-fixed effects to account for
year-specific factors that could affect employment growth independent
of investment; events in 2019 related to the Taper Tantrum, for
example, would be captured by the 2019-specific time-fixed effect, and
the time-fixed effects as a group would capture business cycle dynamics
throughout the estimation horizon. The results of this regression allow
us to see both the short-run and long-run impacts of investment on
annual employment growth at the county level. While the short run
measures the contemporaneous (same-year) impact of B&I investment, the
long-run impact looks at employment growth over a 3 year period after
investment. In what follows, we focus on the long-run implications for
employment as the macroeconomic effects of investment tend to have
persistent effects on the macroeconomy.
i An estimated 750,000 jobs were created from the B&I
investment made between 2012 and 2022.
Table 6 illustrates the long-run impact of B&I investment on county
employment growth. The long-run impact is estimated to be a 0.0917
percentage point increase in annual employment growth for every million
dollars invested. This aggregates the estimated impact of investment on
employment growth over a 3 year period.\3\ The dependent variable is
employment growth: to convert this number into an estimate for jobs
created, one needs a base level on which to apply this growth. The base
level is the average numbers of jobs per county. Given the average
number of jobs per county, we can then compute the jobs that would be
created from 1% of jobs growth, e.g., 1% growth of the 73,560 jobs in
2014 would be 735.6 jobs. Multiplying the long-run impact (0.0917
percentage points of growth per million invested) by the number of
millions of investment dollars for each year then yields the expected
number of percentage points increase in annual jobs growth. Multiplying
this by the number of jobs produced for a 1% increase in annual jobs
growth will then give us the estimated number of jobs created
specifically by the B&I investment that year. Summing across the years
included in our dataset, we find that the B&I program produced 757,800
jobs from 2014 to 2022.
---------------------------------------------------------------------------
\3\ Please see the appendix for the justification of this
calculation.
Table 6: Estimated number of jobs created
----------------------------------------------------------------------------------------------------------------
Change in
employment Estimated jobs
Year Total investment Average number of Jobs for 1% growth for $1 created by
(in millions) \4\ jobs per county growth Million of investment
investment
----------------------------------------------------------------------------------------------------------------
2014 $874 73,560 736 .0917 58,914
\4\ For regression
analysis,
investment into
U.S. territories
is not
considered.
2015 $846 75,226 752 .0917 58,348
2016 $1,032 76,476 765 .0917 72,327
2017 $1,152 77,849 778 .0917 82,166
2018 $1,044 79,547 795 .0917 76,090
2019 $1,097 80,237 802 .0917 80,692
2020 $1,046 78,102 781 .0917 74,865
2021 $1,765 81,306 813 .0917 131,553
2022 $1,573 85,209 852 .0917 122,845
--------------------- -----------------
Total........... $10,429 757,800
----------------------------------------------------------------------------------------------------------------
Table 7: Summary of jobs created
------------------------------------------------------------------------
Topic Value
------------------------------------------------------------------------
Total amount invested (in millions) $10,429
Estimated number of jobs created 757,800
------------------------------------------------------------------------
From the information above, we can estimate how much investment is
needed in the average county to create one additional job. The total
amount invested is not what it costs the government to create these
jobs; rather it is actual losses which depend on delinquencies and
defaults. If the loans are paid back in full, there is no cost to the
government; the government only incurs a cost when loans are not
repaid, and this is reflected in the credit subsidy or delinquency
rate. Therefore, the cost to the government is the product of the
subsidy rate with the total investment amount. Given that the subsidy
rate has changed over time, we can multiply the subsidy rate with the
total investment amount by year to get the annual cost to the
government. We then sum across years to get the total cost to the
government of $331,552,052 for the period from 2014 to 2022. Given that
757,800 jobs were created during this period, this translates to the
cost per job in the long run of $438.
Table 8: Job created: cost to the government
------------------------------------------------------------------------
Cost to the
Total Jobs created government
Year investment (in by Subsidy rate (in
millions) \5\ investment millions)
------------------------------------------------------------------------
2014 $874 58,914 6.99% $61
\5\ For
regression
analysis,
investment
into U.S.
territories
is not
considered.
2015 $846 58,348 5.11% $43
2016 $1,032 72,327 3.88% $40
2017 $1,152 82,166 4.01% $46
2018 $1,044 76,090 4.06% $42
2019 $1,097 80,692 2.32% $25
2020 $1,046 74,865 2.05% $21
2021 $1,765 131,553 1.14% $20
2022 $1,573 122,845 2.01% $32
------------------------------ -------------
Total....... $10,429 757,800 $332
------------------------------------------------------------------------
Table 9: Summary of cost to the government
------------------------------------------------------------------------
Cost category Value
------------------------------------------------------------------------
Total Amount Invested $10,428,680,246
Total Estimated Jobs Created 757,800
Total Cost to Government $331,552,052
Cost to Government per Job Created $438
------------------------------------------------------------------------
Counties that Receive Investment See a Positive Effect on Earnings
To evaluate the impact that investment had on earnings, we looked
at county pairs; counties that received investment were paired with the
most similar county that did not receive investment in terms of
earnings per worker in the year of investment. This was done for all
counties that first received investment between 2013 and 2021. The
earnings data were obtained from BEA, which, combined with the
employment data mentioned above, produces earnings per worker variable
that we examine. By averaging the earnings per worker each year for
these two sets of counties (those with investment and their
counterparts without investment), we can see the positive impact
investment has on earnings over time.
i Counties that received B&I investment saw a higher
increase in their average earnings per worker for 9 consecutive
years after initial investment than similar counties that did
not receive investment.
Figure 7 shows average earnings per worker for counties that
received investment (blue line) and the matched counties that did not
(black line). The x-axis shows years relative to the first investment
(time = 0), with up to 9 years before investment (time = ^9 for
counties with first investment in 2021) and up to 9 years after (time =
9 for counties with first investment in 2013). The blue bars illustrate
the difference between the average earnings per worker of the counties
that received investment versus the matched counties that did not (blue
minus black).
Figure 7: Average earnings per worker for counties that received
investment and matched counties that did not receive investment
Before initial investment (i.e., to the left of zero on the graph),
counties that received investment had lower earnings for worker on
average when compared with counties that did not receive investment. A
few years post-investment, however, there is an inflection point where
earnings per worker for counties that receive investment start to
outpace earnings per worker for counties that did not receive
investment. This suggests that counties that receive B&I investment
earn more per worker than counties that do not, and that this
difference grows over time: B&I investment is thus directly correlated
with a persistently positive impact on earnings per worker at the
county level.
Counties that Receive Investment See a Positive Effect on GDP
Similarly, to evaluate GDP, counties with investment were again
matched to the most similar counties without investment by GDP per
capita (Figure 8) and GDP (Figure 9). The GDP and population data are
obtained from BEA. By aggregating over these two sets of counties
(those with investment and their counterparts without investment), we
can see the positive impact investment had on GDP per capita and GDP
over time.
i On average, in the years following initial investment,
counties that received B&I investment had higher GDP per capita
and GDP than similar counties that did not receive investment.
Figure 8 below shows the average GDP per capita for counties that
received investment (blue) and the matched counties that did not
(black). Data from 2012 through 2022 are used. The x-axis shows years
relative to the first investment (time = 0), with up to 9 years before
investment (time = ^9 for counties with first investment in 2021) and
up to 9 years after (time = 9 for counties with first investment in
2013). The blue bars illustrate the difference between the average GDP
per capita of the counties that received investment versus the matched
counties that did not (blue minus black).
Figure 8: Average GDP per capita for counties that received investment
and matched counties that did not receive investment
The same graph is produced for GDP, and we see similar trends and
results in Figure 9.
Figure 9: Average GDP for counties that received investment and matched
counties that did not receive investment
Both graphs show a similar trend with counties that received
investment having higher GDP per capita and GDP than those without
investment. Furthermore, the difference between the two series tends to
increase over time. B&I investment is thus directly correlated with a
persistently positive impact on GDP and GDP per capita at the county
level.
State-Level Analysis: Positive Impact of B&I on Sales and Taxes
Finally, we investigated the impact B&I investment had on the
amount of sales tax each state collected. State tax data are obtained
from the U.S. Census Bureau, which conducts an Annual Survey of State
Government Tax Collections. To evaluate the impact of the B&I program
on taxes at the state level, we start by aggregating B&I investments
between 2012 and 2022. When performing regression analysis, tax revenue
should be modeled differently than the employment data. Unlike
employment data, tax revenue from 2014 should not be treated the same
as tax revenue from 2022. This is due to inflation over time (as taxes
are a nominal quality) and because taxes are inherently more volatile
then employment data. For these reasons, we focus on the impact of B&I
investment on the percentage of state taxes as opposed to the level,
given that percentages are unit-less (and hence time-invariant). To
determine the expected percent change of sales tax collected based on a
1% increase in B&I investment made to that state, we estimate a log-log
ordinary least squares model; the logarithms on both sides of the
regression ensure that the units are in percentages when interpreting
the results from the model. Figure 10 shows a scatterplot of log of B&I
investment against the log of sales tax collected for all 50 states
from 2012 to 2022 (when investment was not equal to zero). There is a
strong positive correlation between these two transformed variables.
Figure 10: Log of state sales income tax collected plotted against log
of B&I investment
Scatter Plot of Investment vs. Sales Tax Per Capita
i A 1% increase in B&I investment results in a 0.55%
increase in sales tax revenue for the average state in the long
run.
To determine the long-run impact of investment, we then estimate a
regression model where the logarithm of state sales tax is the
dependent variable, and the independent variable is the logarithm of
the aggregated investment amount of the current year and the 2 previous
years. This model also controls for the year the investment was made.
The dataset thus includes observations from all 50 states with nonzero
investment for 3 consecutive years in which the last of the 3 years was
between 2014 and 2022. The results indicate that for every 1% increase
in B&I investment into a state, we expect to see a 0.55% increase in
state sales tax collected over a 3 year period.
Assessment Methodology: Brief Overview
For more information on this study, contact us at
[email protected].
Table 10: Overview of assessment methodologies
------------------------------------------------------------------------
Methodology description
-------------------------------------------------------------------------
Case studies
------------------------------------------------------------------------
Loan selection: Identified B&I programmatic loans for potential
inclusion, based on the following characteristics of interest:
Project started around the time of OneRD (2021)
Geographic diversity
Industry diversity
Funded project at or near completion, to capture loan impacts
Interviews: Conducted 45-60 minute interviews with lenders and
borrowers to gather data on loan details, how the loan helped their
business grow, and challenges faced before obtaining the loan.
Data analysis and summarization: Identified key themes in each
case study and developed a one-page infographic for each.
------------------------------------------------------------------------
B&I programmatic data
------------------------------------------------------------------------
Submitted a comprehensive FOIA data request to the USDA Rural
Development Innovation Center covering the B&I Guaranteed Loan Program
from FY 2000 through FY 2024.
Data included annual program allotments, obligated amounts, and
full loan-level details such as borrower type, industry codes, lender
names, and project-specific funding indicators.
Included identifiers geographic (e.g., county, ZIP [C]ode,
Congressional district), loan performance metrics (e.g., delinquencies,
losses), and program structure indicators (e.g., OneRD vs. Pre-OneRD,
ARRA vs. Non-ARRA).
Loan-level data received was validated against publicly
available records from USDA's Rural Data Gateway to ensure consistency
and completeness.
------------------------------------------------------------------------
Macroeconomics summary statistics
------------------------------------------------------------------------
Econometric analysis of employment, earnings, GDP and tax data.
Employment, earnings, and GDP analysis are at county level, tax
analysis at state level.
Regression techniques allow for estimation of short-term and
long-term impacts.
Matching allows for identification of macroeconomic effects of
the RD program by grouping observations with similar characteristics
and probability of receiving an investment.
------------------------------------------------------------------------
Summit is a specialized analytics firm that drives decision-making
through data analytics. We bring expertise in economics, statistics,
predictive modeling, and analytics to implement solutions for a wide
range of clients. Our mission is centered on delivering data-driven
solutions to help make government efficient and cost-effective.
Contact Us: Anthony Curcio, Senior Partner, 202-407-8309 Tel, 509-
984-8943 Fax, [email protected]
------------------------------------------------------------------------
The Chairman. Thank you, ma'am. Commissioner, you are
recognized.
STATEMENT OF HON. PAUL HEIMEL, COMMISSIONER, POTTER COUNTY,
PENNSYLVANIA, COWDERSPORT, PA; ON BEHALF OF NATIONAL
ASSOCIATION OF COUNTIES
Mr. Heimel. Well, Chairman Johnson, Ranking Member Davis,
and distinguished Members of the Subcommittee, I want to thank
you for holding today's hearing. I would like to share some
ideas to strengthen the partnership between counties and our
Federal partners to try to better serve rural America. My name
is Paul Heimel, and I am a Commissioner in Potter County,
Pennsylvania. I am here on behalf of the National Association
of Counties, but I want to point out that our county has a
grand total of less than 16,000 residents countywide, so we are
truly rural. County governments, though, are on the front-lines
in rural America, providing essential services that make it
possible for our residents to stay, work, and thrive in our
communities. Given our limited staff, our tight budgets, we
rely on strong Federal partnerships to get the job done.
Now, USDA Rural Development is our most important Federal
partner in this work. This year alone, the RD has invested $26
billion in 60,000 projects across rural America. In Potter
County, dating back to 2015, USDA RD has helped fund 95
projects supporting our energy systems, our community
facilities, our small businesses, and affordable housing for
working families. Without this backing, these projects would
have been out of reach for our local communities, but too
often, the communities that need USDA RD the most are the ones
that are least able to access it. That is why I am here today
to urge Congress to modernize, streamline, and expand USDA RD
programs so that all rural counties have the tools we need to
build stronger, more resilient communities. I am going to put
forward four practical reforms for Congress to modernize the RD
programs and empower rural counties like ours.
First is a fast-track pathway for small-dollar projects.
Congress should direct USDA RD to develop a simplified
application and approval process, allowing those of us with
limited local resources to quickly secure funding for time-
sensitive local needs. Second, make pre-development costs
eligible across RD programs. Counties often pay up front for
site selection, feasibility studies, environmental review, and
more before we can use the funding awards, and that creates
steep barriers to entry. Congress should consider allowing
these pre-development costs as eligible expenses under RD grant
and loan awards to support this early-stage development. Third,
build a single online portal. Applicants could check
eligibility, they could track applications and get real-time
support. That one-stop system would cut the red tape, improve
transparency, and better serve communities like ours with such
limited staff. And finally, invest in rural capacity building
in the next farm bill. Local governments can't leverage Federal
resources without staff, planning capacity, and partnerships.
We face in our rural county an individual who might be tasked
with three or four major responsibilities. In larger counties,
they could have four or five people doing those three or four
responsibilities. It is simply impossible to navigate the
bureaucratic process sometimes when you are not properly
staffed, and we can only afford so much staffing.
We also ask the Committee to conduct oversight over USDA's
internal reorganization efforts. Counties support the
Department's goals of improving efficiency, but any
reorganization must preserve the USDA RD's field-based network
and staff capacity. This is very important. Field staff are
trusted partners. They have been that way for decades. Their
knowledge, their relationships cannot be replaced by
consolidation. We must preserve what makes USDA effective: its
field offices, its local partnerships, and its deep
understanding of rural America.
Now, Chairman Johnson and Ranking Member Davis, counties
stand ready to do our part. With a strong USDA RD backed by a
new, modernized farm bill, we can ensure that every county, no
matter its size or capacity, has a fair shot at success. Thank
you, and I look forward to your questions.
[The prepared statement of Mr. Heimel follows:]
Prepared Statement of Hon. Paul Heimel, Commissioner, Potter County,
Pennsylvania, Cowdersport, PA; on Behalf of National Association of
Counties
Chairman Johnson, Ranking Member Davis, and Members of the
Subcommittee, thank you for the opportunity to testify on behalf of the
National Association of Counties (NACo) and the nation's 3,069
counties, parishes and boroughs. NACo represents nearly 40,000 county
elected officials and 3.6 million county employees working every day to
deliver essential services that support our residents. We appreciate
the chance to work toward our shared goal of fostering stronger, more
resilient rural communities
My name is Paul Heimel, and I am honored to serve as a County
Commissioner in Potter County, Pennsylvania, home to roughly 16,000
residents across one of the most rural and beautiful regions of the
Commonwealth. Before my time in county government, I served as third-
generation editor of the local weekly newspaper for 2 decades; took a
detour to work in corporate communications and public relations for
several years, and was then elected to a seat on the Potter County
Board of Commissioners, where I have served for nearly 18 years.
As a commissioner, I've been a strong advocate for rural counties,
leading efforts to expand services for military veterans, implement
criminal justice reforms and support a wide range of local initiatives.
I also serve in leadership roles with the County Commissioners
Association of Pennsylvania, and I remain actively involved with the
National Association of Counties.
The U.S. Department of Agriculture's Rural Development mission area
(USDA RD) is an indispensable Federal partner for counties like mine.
Through community facilities financing, entrepreneurial capital and
technical support, USDA RD programs help local governments, our
partners and residents build and sustain thriving rural communities.
Today, I will highlight the following items:
The role counties play in rural development.
The critical need for USDA RD programs to address local
needs and support county-led growth.
Practical improvements to modernize and scale USDA RD tools
so rural Americans can access them.
Impacts of USDA's departmental reorganization as it relates
to preserving the vital role USDA RD plays in our communities.
By shaping policy to match rural governance, we can ensure that
every community, regardless of size, location or capacity, has a fair
shot at success.
County Governments Play a Critical Role in Rural America, but Face
Persistent Structural Challenges
Rural America is home to 20 percent of the nation's population and
spans more than 70 percent of its land mass. In these communities,
county governments are the connective tissue that holds rural life
together. Counties provide the public safety, emergency response and
law enforcement residents count on in moments of crisis. We build and
maintain the roads, bridges and water systems that keep people and
goods moving. We plan and permit development, support local businesses,
run elections and invest in education. In partnership with state and
Federal agencies, we deliver the everyday human services that make it
possible for people to live and work in rural areas even when budgets
are tight and staff are stretched thin.
Despite the vital role counties play, the challenges we face are
deep and persistent. Rural residents are among the most under-served in
the country. The poverty rate in rural America (14.4 percent) is 2.5
percentage points higher than the national average (11.9 percent). Of
the 353 counties experiencing persistent poverty, 85 percent are rural.
One in five rural census tracts is considered a disadvantaged
community, a key indicator of vulnerability to shocks like economic
downturns and natural disasters.
Potter County is extremely rural, with a population that has fallen
below 16,000 for the first time since 1920. Meanwhile, the median age
has been steadily rising to nearly 50 years; nationally it's 38.7. Each
year, we have more deaths than births and we continue to see a serious
out-migration of teens and young adults.
Rural counties face unique challenges in meeting local needs. With
limited staff and funding, many lack the capacity, defined as the
personnel, expertise and capital, to deliver services and pursue
external funding. These gaps can make it difficult to apply for or
manage state and Federal programs, especially those with complex
requirements, reporting burdens or match obligations. As a result, the
communities most in need of investment are often least able to access
it.
In Light of These Challenges, USDA RD Is Our Most Important Federal
Partner
USDA RD is often the only source of support that can move a project
from an idea to a reality. Each year, USDA RD finances tens of billions
of dollars in rural infrastructure, housing and business investments
across tens of thousands of projects. USDA RD programs have invested
over $26 billion across nearly 60,000 projects in FY 2025 alone. The
value of USDA RD is not only capital it can provide, but also its
delivery model. USDA deploys a field-based workforce that places
experienced staff in or near the communities they serve. In many rural
areas, the USDA field office is the front door to the Federal
Government. That local presence helps projects take root and succeed.
I've seen firsthand what USDA RD means for rural counties like
mine. In Potter County, we have been proud and frequent partners with
USDA RD going back to the 1980s. We have seen $8.23 million in 95
different USDA RD investments since FY 2015, including $3.86 million in
loans and $4.37 million in grants. These investments have touched
nearly every corner of community life: housing, public works, emergency
services and more. We have leveraged USDA RD loans and grants to
acquire and improve water systems in places like Roulette Township,
helped our local ambulance association purchase lifesaving equipment
and built housing that our seniors and working families can actually
afford. USDA RD programs have enabled low-income residents to buy their
first homes and stay in them through critical home repair financing.
These kinds of projects are often out of reach for counties like
ours without Federal help. With one of the lowest median incomes in
Pennsylvania and a real estate tax base undercut by the 44 percent of
land in our county that is state-owned and tax exempt, we simply cannot
do it alone. Environmental compliance, prevailing wage and other
important standards often come with price tags we can't meet without
outside support. USDA RD has been that support, and when called upon,
we have always stepped up and met the local match.
These needs are not going away. If anything, they are growing more
urgent. Rural health care in our region is approaching a full-blown
crisis. Just 3 months ago, the maternity ward at our local UPMC
hospital closed, leaving behind a seven-county maternity desert across
the northern tier of Pennsylvania. More recently, the same hospital
closed its skilled care unit, a service it had provided for more than
50 years. Our communities are losing essential care, and with each
closure, our families are left with fewer and fewer options. We are
trying to respond the way rural communities always do: with creativity,
collaboration and a commitment to taking care of our own. However, we
know we cannot reach our full potential without strong Federal
partnerships.
That is why USDA RD matters to counties like mine. Not just because
of what it has helped us build in the past, but because of the role it
must continue to play as we face the challenges ahead. Our track record
shows that counties like Potter are ready to do our part, but we need
USDA RD to have the resources and flexibility to meet us there.
USDA RD Programs Are Vital Tools for County-Led Growth
For county leaders, USDA RD programs are some of the most powerful
tools we have at our disposal to grow local economies, support small
businesses and provide essential services in rural communities. I want
to speak today from both experience and observation: what's worked, and
where small changes would go a long way. The following is a breakdown
of major programs in USDA RD's portfolio under consideration by the
Subcommittee at today's hearing, along with recommendations our
Congressional partners can consider to improve outcomes from these
resources.
Programs with Direct County Eligibility
The Community Facilities Program (CFP) is the backbone of rural
infrastructure finance. Counties use it to build, equip and renovate
EMS facilities, 911 dispatch centers, rural health clinics,
courthouses, jails, community centers and more. These are the assets
that keep our towns functioning. They are often owned and operated by
the county for decades. In Potter County, an additional CFP-financed
ambulance can mean the difference between life and death on a snowy
night when there's only one crew on duty.
Counties also see the catalytic potential of CFP dollars to advance
rural food systems and entrepreneurship. In neighboring Cameron County,
a former restaurant has been transformed into a certified production
facility for locally sourced food products. This Innovation Center is
the only commercial kitchen available across our region of northern
Pennsylvania. Thanks to a $345,000 USDA Community Facilities grant, the
space now serves as a shared-use kitchen where food entrepreneurs can
produce sauces, soups and baked goods that meet USDA food safety
standards. These producers can then sell to local retailers, online
customers, farm markets and community events, thereby creating new
revenue streams rooted in our community.
But the project is about more than equipment. It has become a hub
for rural workforce development and community revitalization. Penn
State Extension now uses the space to host ServSafe certification
courses and small business classes. Northern Pennsylvania Regional
College offers culinary training for local students. CareerLink has
plans to use the site for job readiness programming. The Chamber of
Commerce and Artisan Center relocated to the facility, strengthening
local tourism and creating a visible front door for the county's
creative economy. The project even spurred a $65,000 follow-on grant
from the local electric utility to purchase energy-efficient kitchen
equipment. This is the kind of rural innovation that USDA programs make
possible, and it shows how even modest Federal dollars, when paired
with strong local vision, can spark durable, multifaceted benefits for
rural communities.
CFP's strength lies in its ability to finance right-sized projects
tailored to rural service areas, but matching requirements, a lack of
planning support and a rigid cost structure limit participation.
Congress should expand access to predevelopment funds, waive match
requirements for fiscally constrained counties and prioritize small-
scale, low-overhead projects that stretch taxpayer dollars further.
Structuring CFP with these rural realities in mind would unlock
hundreds of essential projects across the country.
The Rural Business Development Grants (RBDG) Program is one of the
most flexible tools available to rural counties for small business
development. Counties have used it to create shared-use kitchens,
support rural tourism corridors, provide microloans through local
revolving funds and help workers form cooperatives in the absence of
local employers. RBDG is a program we turn to when we want to breathe
life into our town centers--not through big-ticket incentives but by
seeding practical investments block-by-block. The grant is accessible
to counties but constrained by modest funding levels and a 1 year award
structure that makes incorporating RBDG program funding into long-term
planning difficult. Administrative requirements can also be burdensome
for counties with only limited access to economic development staff.
Congress can improve RBDG by increasing award caps, enabling multi-year
grants and expanding eligible uses to include site development,
community branding and marketing. A small increase in flexibility and
funding would yield outsized returns.
Rural Innovation Stronger Economy (RISE) grants support a critical
but often out-of-reach goal for counties: building regional innovation
infrastructure. The program funds hubs that combine entrepreneurship,
workforce development and industry support tailored to local strengths.
In rural Pennsylvania and nearby New York, counties are using RISE to
grow sectors like forest products, sustainable building materials and
outdoor recreation manufacturing. These efforts create durable, locally
rooted jobs and expand economic opportunity for our residents.
RISE makes these projects possible by financing the facilities and
training needed to launch them. However, the program's complexity makes
it hard for smaller counties--especially those without planning staff
or anchor institutions--to apply. Without dedicated technical
assistance, it's difficult to form the required consortium or develop a
competitive business plan. USDA should create a smaller-scale tier for
early-stage applicants, fund regional TA providers to help form
partnerships and expand eligible activities to include convening and
planning. The program's design is strong. It just needs to reach the
communities it was built to serve.
The Meat and Poultry Intermediary Lending Program (MPILP) helps
counties address a key gap in rural agricultural economies: local
processing capacity. The program provides flexible capital to
intermediaries, who then relend to small- and mid-size processors.
Counties can serve as intermediaries or partner with them to finance
equipment like cut-and-wrap rooms, cold storage, refrigerated trucks,
wastewater pretreatment and food safety upgrades. In places like Potter
County, this support can keep a regional plant open or add a mobile
unit so producers don't have to haul livestock long distances. These
investments keep more value in the community and strengthen local
supply chains.
Still, MPILP's structure can be burdensome. It requires detailed
planning, long timelines and documentation that small counties and
processors often can't manage alone. USDA should issue county-specific
guidance, allow smaller relending deals and permit bundled projects
that combine equipment, food safety compliance and distribution needs.
Eligible uses should include regional cold storage and last-mile
delivery. USDA should also pair financing with technical assistance for
business planning and food safety and align loan terms with the
seasonal nature of cash flow. The program's intent is strong. With
simpler access and right-sized tools, MPILP can better reach the
communities it was built to support.
Programs Where Counties Access Support Through Key Partnerships
The Rural Economic Development Loan and Grant (REDLG) Program
demonstrates how much can be accomplished when Federal capital flows
through trusted local institutions. In many rural regions, the most
capable financial intermediary is the electric cooperative or telecom
provider. These institutions know the community, understand rural
credit and are willing to provide capital that may otherwise be
unavailable through private-sector sources. Counties frequently
collaborate with these co-ops to finance fire stations, broadband
deployment, health clinic, main street revitalization projects and
more. But REDLG's structure limits the county role. Only eligible USDA
borrowers--typically utilities--can apply directly, and county access
depends entirely on informal partnerships. USDA provides limited
guidance on how these partnerships should be structured. Congress can
make REDLG more accessible by allowing counties to serve as co-
applicants, expanding eligible uses to include housing and
infrastructure planning and streamlining USDA's review process to
ensure timely deployment. Rural counties are ready to lead projects.
However, we need a clearer and more direct pathway to the capital.
Although counties cannot apply directly for Value-Added Producer
Grants (VAPG), we often play an indirect but essential role in helping
rural producers access support through the VAPG program. These grants
keep more agricultural wealth in rural communities--for example, by
helping a dairy farm start an on-site cheese operation or a grain co-op
launch a branded flour line. That added value builds resilience and
supports the supply chain that rural counties rely on to sustain our
local economies. However, the smallest producers often don't have time
or expertise to prepare a full VAPG application. VAPG is designed for
independent producers and ag-based business ventures. Grants require a
1:1 match and a detailed business plan. Smaller producers struggle to
meet those requirements, and counties are currently unable to serve as
fiscal agents or technical assistance providers under the program.
Counties could help by coordinating producer groups, offering matching
funds or providing technical assistance, but the program doesn't
currently make space for us. USDA should allow counties or regional
entities to serve as administrative partners, fiscal sponsors or TA
providers for small producer groups. Template business plans and
streamlined application pathways would also help. If we want to grow
rural wealth from the ground up, we need tools that empower the people
and institutions already doing that work.
The Rural Business Investment Program (RBIP) is USDA's effort to
bring equity capital to rural communities, something many rural
businesses find elusive. Counties indirectly benefit from RBIP when
approved investment funds (RBICs) support firms located in their
communities. But RBICs often overlook smaller or more remote counties,
and many rural businesses are not investment-ready. Counties can help
identify promising local firms or sites, but the program offers no
formal mechanism for engagement or coordination. RBIP can work better
for rural counties if USDA requires RBICs to engage with local
governments when evaluating investments, provides technical assistance
to help firms become investment-ready and expands capital structures
beyond equity. For example, supporting mezzanine or revenue-based
financing models that better match rural growth trajectories. If USDA
wants private capital to align with rural economic development,
counties need a seat at the table.
The Rural Microentrepreneur Assistance Program (RMAP) recognizes
that the most important businesses in rural counties are sometimes the
smallest. From mobile mechanics to home health aides, these
entrepreneurs don't need millions. They need a few thousand dollars and
guidance on bookkeeping, business planning and compliance. RMAP is one
of the few programs designed to meet these needs, pairing small loans
with hands-on coaching from local intermediaries. Where those
intermediaries exist, counties often partner by making referrals,
sharing space or helping meet match requirements. But in places without
intermediaries, counties have no clear way to fill the gap. RMAP
currently excludes counties from eligibility. Congress should expand
eligibility to allow counties and county-led economic development
agencies to serve as intermediaries or partners. USDA should also offer
multi-year funding for strong-performing Microenterprise Development
Organizations and streamline re-advances to avoid service disruptions.
This is one of USDA's most effective programs. It just needs to be
easier to deliver and grow where it's needed most.
The Upcoming Farm Bill Presents a Critical Opportunity To Expand Access
and Modernize Delivery of USDA RD Programs and Resources
USDA RD programs are among the most powerful levers the Federal
Government has to support infrastructure, small business growth and
community vitality in rural America. But far too often, these programs
are out of reach for the counties they are meant to serve, not because
the needs aren't real, but because the systems around those programs
are too complex, too slow or too disconnected from rural reality.
The House Agriculture Committee has a chance to change that. By
including commonsense reforms and new investments in the next farm
bill, the Committee can ensure that USDA RD remains not only well-
resourced, but also responsive, accessible and effective for rural
counties. These are the types of improvements that will not make
headlines, but they will make a difference. They will ensure that USDA
RD programs reach the counties they were designed to serve, and that
rural America is not just included in the farm bill but fully empowered
by it.
Counties Urge Members of the Committee To Consider the Following
Recommendations In Any Future Action on USDA RD Programs
Simplify access for small-dollar projects: USDA should establish a
streamlined application track for modest but essential investments
under Community Facilities and RBDG. These micro-projects such as
acquiring new ambulances, HVAC replacements at senior centers or code-
compliant restrooms in childcare facilities, deliver high value but
often face disproportionate administrative hurdles. For these
applications, USDA should reduce narrative requirements, allow a single
unified budget narrative and waive documentation not required by
statute.
Pre-development activities like feasibility studies, site selection
and environmental review should be explicitly eligible uses under USDA
RD programs. These expenses often fall to county general funds and are
a major barrier to participation for rural jurisdictions.
USDA should standardize core application components across CF,
RBDG, RMAP and REDLG to the extent permitted by statute, and pilot a
common core form. Pilot regional bundling of small projects with a
single review. Where NEPA scopes and lead-agency determinations align,
allow a single environmental record across RD programs. Applicants
could then reuse project narratives, budget forms and attachments,
reducing duplication and cutting down on application time for
applicants and administrative review for USDA RD staff.
Improve program sequencing and coordination: Federal resources are
most effective when local staff can align them with real-world
timelines. USDA should open rolling concept submission windows and
adopt quarterly award cycles to allow counties to coordinate with board
calendars, permitting processes and legislative sessions.
To support early-stage applicants, USDA should publish a plain-
language eligibility matrix listing allowable uses, matching
requirements and unique criteria for each RD program. This should be
paired with a living repository of sample projects--for example, ``fire
hall expansion'' under Community Facilities Program or ``shared-use
commercial kitchen'' under the Rural Business Development Grant and
Loan Program--informed by regular field office feedback and updated to
align with programmatic and statutory changes.
Where National Environmental Policy Act (NEPA) scopes are similar,
USDA should allow a single environmental record to satisfy requirements
across programs. This would save consultant costs and staff time while
maintaining environmental protections.
Strengthen field-based delivery: In many rural counties, the USDA
field office is not just the point of access for RD programs--it is the
only Federal office in the region and a front door to the Federal
Government for rural residents. The success of USDA's local delivery
model depends on having enough staff with enough time and expertise to
provide real support to rural customers. USDA should prioritize
backfilling vacancies and limiting individual caseloads, particularly
in high-demand states and persistent poverty counties.
USDA should also establish standing virtual and in-person office
hours at the state level, where county staff and regional development
partners can schedule brief consultations to review project concepts
and get questions answered. These consultations should be available at
least biweekly and staffed by specialists trained in multiple program
areas.
In addition, USDA should provide resources for circuit-rider TA
teams or technical assistance (TA) vouchers that counties can use with
trusted nonprofit partners, regional councils or local economic
development organizations to build capital stacks and navigate post-
award compliance. USDA's Community Facilities Technical Assistance and
Training and Rural Community Development Initiative programs provide a
potential model for this approach, but funding should be scaled up and
targeted specifically at pre-application support.
Make rural-scale financing work: Rural projects often stall not
because they lack merit but because funding sources cannot be aligned
in time. USDA should offer conditional commitments or letters of
interest across programs to help counties demonstrate intent to fund
when applying for state appropriations or private match. These tools
exist in CF loans and Single-Family Housing and should be extended
across RD programs.
USDA should clarify that reasonable interest on interim financing
is an eligible project cost under CF and RBDG. Counties often rely on
bridge loans while awaiting obligation. Clear guidance would ease cash
flow constraints without increasing risk. Counties and regional
entities should also be allowed to bundle small projects into a single
coordinated application to reduce transaction costs and achieve scale.
Modernize USDA RD technology to improve rural access: Counties urge
USDA RD to consider building a single web-based ``front door'' for its
programs. This portal should include:
A program matching tool based on project need and location
Application status tracking for pre- and post-award stages
Email and text alerts for deadlines, missing items and
decisions
Save-and-reuse functionality for standard forms
A geospatial eligibility checker that overlays maps with
population data and priority designations
Published service standards including average review times,
common deficiencies and FAQs
USDA's existing tools, like RDApply and the Rural Data Gateway,
offer a foundation, but functionality must be expanded. Portals should
be mobile-friendly and usable in low-bandwidth settings to accommodate
rural connectivity gaps.
Invest in rural capacity building: To ensure USDA RD programs reach
the communities they're intended to serve, the 2025 Farm Bill must
include dedicated investments in rural capacity building. Counties face
persistent barriers to accessing Federal resources not because of lack
of need or readiness, but because of limited staffing, grant-writing
expertise and technical support.
The 2025 Farm Bill presents a key opportunity to address this
challenge. Counties support the inclusion of new rural capacity-
building initiatives that would provide multiyear, flexible grants to
local stakeholders to plan, implement and coordinate community
development strategies across rural America. This would help counties
overcome longstanding barriers to accessing Federal funds by investing
in the staff, partnerships and tools needed to move local priorities
forward and level the playing field for rural communities. We also
support devoting mandatory funding to rural development programs.
Consistent funding is essential to ensure capacity-building support is
not subject to year-by-year appropriations, especially in communities
that need the most help in reaching Federal resources.
These recommendations are not radical departures from current law.
They are practical, bipartisan adjustments that build on USDA's own
successful models, expand access for the smallest and most under-served
counties and ensure that Federal dollars are deployed more efficiently.
By making these changes in the next farm bill, the House Agriculture
Committee can bring USDA RD into closer alignment with the realities of
rural governance.
As Congress considers the future of USDA programs through the
upcoming farm bill, it is equally important to ensure that USDA's
internal reorganization strengthens, rather than weakens, the
Department's ability to deliver on-the-ground results in rural
communities.
Counties support USDA's goal of improving operational efficiency
and ensuring taxpayer dollars are used effectively. At the same time,
we urge the House Agriculture Committee to exercise strong oversight
and ensure that USDA's reorganization builds on the Department's
greatest strength: its field-based presence and local relationships.
In many rural counties, USDA field staff are more than program
administrators. They are neighbors, partners and in many cases the only
visible Federal officials available to residents. Counties collaborate
with USDA every day to implement conservation projects, expand
broadband, deliver nutrition assistance, respond to disasters and build
affordable housing and infrastructure. These are practical, place-based
partnerships that depend on trust, continuity and local expertise. As
the reorganization moves forward, the Committee has a critical
opportunity to ensure that USDA remains rooted in the communities it
serves and continues to deliver on the ground.
To that end, counties offer the following recommendations for
strengthening USDA's service delivery model through the reorganization
process:
1. Maintain and Strengthen USDA's Field-Based Workforce: USDA field
offices are instrumental in helping counties navigate
complex programs, tailor projects to local needs and
deliver timely support during emergencies. These personnel
are not interchangeable with centralized systems. They
offer institutional knowledge and community trust that
cannot be replicated through regional hubs alone. USDA
should prioritize backfilling vacancies, empowering field
offices and ensuring staff have the time and flexibility to
support small and first-time applicants. In states where
counties administer SNAP and other safety net programs,
these staff will be especially important as local
governments implement changes included in H.R. 1.
2. Engage Local Governments and Partners Early and Often: Counties
are key intergovernmental partners in serving USDA's rural
customer base. USDA should establish regular stakeholder
consultation mechanisms, including listening sessions,
rulemaking comment opportunities and continued cooperating
agency status for counties. Structural changes that affect
how counties interact with USDA should never be implemented
without meaningful local input.
3. Ensure Continuity of Operations During Reorganization: Counties
rely on USDA to support housing, infrastructure, nutrition
and economic development projects. Delays caused by
staffing gaps or administrative restructuring could
threaten local timelines, funding drawdowns, or compliance.
USDA should publish clear continuity protocols and
designate points of contact for impacted programs to help
local governments and grantees stay on track during
transitions.
4. Clarify the Role of Regional Hubs: While there may be cost-
efficiencies in relocating some functions, regionalization
must not come at the expense of responsiveness. USDA should
define the responsibilities and decision-making authority
of regional offices, protect local office autonomy for
project-specific decisions, and assess how hub structures
affect applicant experience in rural communities.
5. Preserve USDA RD Within USDA's Jurisdiction: USDA should continue
to lead the Federal rural development mission. No other
agency offers the same blend of local delivery, sector-
specific expertise, and cross-program coordination. USDA
should continue to build on this capacity, not transfer it
elsewhere.
6. Prioritize Cross-Mission Area Integration and Interagency
Coordination Without Losing Local Responsiveness: USDA
should seek to better integrate operations across mission
areas without sacrificing specialized expertise or local
responsiveness. Streamlining is welcome where it reduces
redundancy and improves access. But integration must not
result in one-size-fits-all programming or diminish the
availability of subject-matter experts in state and local
offices. USDA should retain flexible, agency-specific TA
resources and ensure integration efforts remain responsive
to local context.
As the House Agriculture Committee considers USDA's proposed
reorganization alongside farm bill reauthorization, we encourage
Members to protect the principles that have made USDA such a vital
partner to rural counties: proximity, partnership and place-based
problem-solving. USDA's footprint in rural America is not a relic. It
is a modern and necessary foundation for effective service delivery.
With the right safeguards and stakeholder engagement, this
reorganization can strengthen USDA's ability to deliver on its mission
and help ensure that no county is left behind.
Conclusion
Chairman Johnson and Ranking Member Davis, on behalf of NACo and
rural counties across the country, thank you for your attention to
these tools and to the people who rely on them. We stand ready to work
with this Subcommittee to preserve these programs and to modernize and
streamline them so that every county, regardless of size or staff
capacity, can put them to work to build stronger more resilient
communities across rural America.
Mr. Davis. Thank you, Commissioner Heimel. At this time, we
are going to recognize Executive Director Lynne Keller Forbes
for 5 minutes.
STATEMENT OF LYNNE KELLER FORBES, J.D., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, SOUTH EASTERN COUNCIL OF GOVERNMENTS, SIOUX
FALLS, SD; ON BEHALF OF
NATIONAL ASSOCIATION OF DEVELOPMENT
ORGANIZATIONS
Ms. Forbes. Chairman Johnson, Ranking Member Davis, and
distinguished Members of the Subcommittee, I want to thank you
for the opportunity to appear before you this morning on this
important topic. I am Lynne Keller Forbes. I am the President
and the CEO of the South Eastern Council of Governments and the
South Eastern Development Foundation in Sioux Falls, South
Dakota, and I am honored to testify on behalf of the National
Association of Development Organizations, known as NADO.
I grew up on the Cheyenne River Indian Reservation in South
Dakota, where my parents operated a farm and ranch. When I was
young, we hauled our water until rural water was finally
expanded. Rural water was a game changer, not only for our
family, but for our livestock. We didn't have a telephone until
I was in the second grade and the lines were finally expanded
to reach us. Both of these events were only possible because of
the Federal Government's investment in rural America, so my
love for rural America and the advocacy for a strong farm bill
runs deep.
For the past 25 years, I have worked with rural communities
and businesses across southeastern South Dakota, helping them
plan, finance, and implement development projects that improve
infrastructure, expand access to capital, and support long-term
economic growth. Our mission is simple: we want to ensure that
even the smallest communities and businesses have a trusted
partner in building economic resilience and prosperity to help
sustain rural America. One of our most vital partners in this
work is USDA's Rural Development mission area, known as RD.
Today, I want to highlight the critical role regional
development organizations, or RDOs, play in supporting rural
communities and offer some practical recommendations to
strengthen RD's programs and services.
RDOs, also known a councils of governments, planning
districts, and regional planning councils, are multi-
jurisdictional entities that serve as trusted intermediaries
for rural counties, cities, towns, and businesses. We help
communities and businesses access Federal resources, deliver
essential services, and plan for long-term success. In many
cases, RDOs are the lead applicants or technical assistance
provider for RD's programs. We conduct feasibility studies, we
write grant applications, manage complex projects from start to
finish, help develop housing, and provide financing for
businesses that would not otherwise be considered bankable.
Rural America faces unique challenges. Nearly one in seven
Americans live in rural areas, which span \3/4\ of the nation's
landmass. These communities often struggle with limited
infrastructure, higher poverty rates, fewer job opportunities,
and reduced access to broadband, healthcare, and housing.
Despite these challenges, RDOs help rural communities and
businesses navigate Federal systems and unlock funding for
transformative projects. We work closely with RD to deliver
programs, like the Water & Waste Disposal Program, the
Community Facilities Program, the Rural Business Development
Grant Program, and the Intermediary Relending Program. These
programs are not just financial tools, they are lifelines. Let
me share a few examples.
In Dolton, South Dakota, a community of less than 100
people, we helped TM Rural Water secure a grant through the
Water & Waste Disposal Program to rehabilitate lime-drying beds
that were damaged by a derecho storm. Across the country, RDOs
are making similar impacts. In New York, a NADO member used RD
funds to launch a small business technical assistance program.
In Louisiana, another member received funding to develop a
strategic growth model along the I-49 corridor, and in Montana,
an RDO led a coalition securing $10 million through the MPILP
Program to strengthen local processing capacity and expand
economic development opportunities. These examples show how
RD's flexible, place-based approach empowers communities to
structure investments around local needs, often filling gaps
the private-sector cannot or will not address.
As Congress considers reauthorization of the farm bill, I
urge you to prioritize the core programs that create jobs,
improve infrastructure, and support small businesses.
Specifically, we recommend you protect key programs that rural
communities have come to rely on; improve access and
flexibility to empower rural communities to fully participate
in the programs by removing unnecessary barriers; strengthen
the capacity of field offices and regional partners, like RDOs,
to ensure that support services are responsive and tailored to
rural needs; preserve USDA's local footprint. As USDA
reorganizes, maintaining field staff and communities is
essential. RDOs can extend RD's reach, but we urge Congress to
invest in these partnerships. De-federalizing IRP: our B&IGs
and EDA funds have been de-federalized with reduced USDA staff
and limited resources. Now is the time to discuss de-
federalizing IRP funding as well. RD's programs are more than
infrastructure investments. They level the playing field for
communities and businesses that often lack access to capital,
capacity, and partnerships.
As you renegotiate the farm bill, I encourage you to
prioritize the tools that enable rural America to grow and
succeed. Rural communities have never lacked vision or
determination. What they need is a sustained Federal
partnership to build strong, resilient economies that support
families, attract investment, and ensure future generations can
thrive. Thank you again for the opportunity to testify. I look
forward to your questions.
[The prepared statement of Ms. Forbes follows:]
Prepared Statement of Lynne Keller Forbes, J.D., President and Chief
Executive Officer, South Eastern Council of Governments, Sioux Falls,
SD; on Behalf of National Association of Development Organizations
Introduction
Chairman Johnson, Ranking Member Davis, and distinguished Members
of the Subcommittee, thank you for the opportunity to testify today on
behalf of the National Association of Development Organizations (NADO)
and the national network of Regional Development Organizations (RDOs).
NADO empowers RDOs through advocacy, education, and training to advance
collaborative, place-based strategies that strengthen rural quality of
life and economic competitiveness. We are grateful for the opportunity
to join you today to share our perspective.
My name is Lynne Keller Forbes, and for the past 25 years, I have
served as President and CEO of the South Eastern Council of Governments
(SECOG), a Regional Development Organization serving over 315,000
residents across six counties and 40 municipalities in southeastern
South Dakota. In addition to leading SECOG, I also serve as President
and CEO of the South Eastern Development Foundation and Dakota BUSINESS
Finance, two affiliated entities we established to expand access to
capital and support economic development throughout the region.
Through these roles, I have the privilege of working closely with
rural communities across my region to provide coordinated support in
planning, financing, and development. By aligning resources and
expertise, we help local governments and small businesses secure
funding, implement infrastructure projects, and pursue sustainable
growth. Our collaborative approach ensures that even the smallest
communities have a trusted partner in building long-term resilience and
prosperity.
One of our most essential partnerships in delivering impactful
programs and services to rural South Dakotans in our region is with the
U.S. Department of Agriculture's Rural Development mission area (USDA
RD). In my testimony today, I will outline the critical role RDOs play
in supporting rural communities, including programmatic level examples,
and offer practical recommendations to modernize and expand these tools
so they are more accessible to those who need them most. I will also
address USDA's recent departmental reorganization and its implications
for maintaining the central role USDA RD plays in our regions.
About the South Eastern Council of Governments
The South Eastern Council of Governments is a regional planning and
development district serving six counties in southeastern South
Dakota--Clay, Lincoln, McCook, Minnehaha, Turner, and Union--and the
municipalities within them. Established in 1970 by executive order,
SECOG was created to provide staff support to local governments and
promote regional cooperation. Its mission centers on helping rural
communities plan for growth, improve infrastructure, and enhance
overall quality of life through strategic development initiatives.
With four of the six counties we serve having populations under
20,000, SECOG offers a wide range of services tailored to the needs of
rural communities. These services include land use planning, geographic
information systems (GIS), and pre-disaster mitigation planning. A key
component of SECOG's work involves assisting its members in accessing
Federal resources--particularly through the USDA RD programs. SECOG
helps local governments apply for USDA grants and loans such as the
Community Facilities Direct Loan and Grant Program and the Water and
Waste Disposal Loan and Grant Program, which support essential
infrastructure like water systems, public buildings, and waste
management. Through these efforts, SECOG plays a vital role in
strengthening rural South Dakota's capacity to grow and thrive.
How Regional Development Organizations Assist Rural America
RDOs are the backbone of Rural America. This simple truth
underscores the critical role that RDOs--also known as Councils of
Government (COGs), Planning and Development Districts (PDDs), Area
Development Districts (ADDs), Local Development Districts (LDDs), and
Regional Planning Councils (RPCs)--play in supporting rural
communities. These multi-jurisdictional, quasi-governmental entities
serve as trusted regional intermediaries, working on behalf of rural
counties, cities, and towns to deliver essential services, secure
resources, and plan for long-term prosperity.
To understand the value of RDOs, it's important to first understand
the current rural landscape. Rural America is home to nearly one in
seven Americans--just over 46 million people--yet it spans nearly \3/4\
of the nation's landmass. This vast geographic footprint, paired with a
relatively small and dispersed population, makes it inherently
challenging to maintain infrastructure, deliver services, and build
resilient economies. While some rural counties are beginning to grow
again, the challenges remain deep-rooted. Poverty rates are
consistently higher in rural areas than in urban ones, particularly in
regions that have experienced persistent poverty for generations.
Incomes remain lower, job opportunities more limited, and essential
services--like broadband, health care, and affordable housing--are
harder to access. Many rural economies are also heavily dependent on
industries like agriculture, manufacturing, and natural resource
extraction, which remain highly susceptible to market swings and policy
shifts.
Despite the challenges facing rural communities, RDOs play an
essential role in advancing the mission of USDA RD by helping them
plan, access, and implement thoughtful Federal investments tailored to
their unique local needs. RDOs work closely with USDA RD to deliver
essential infrastructure, housing, broadband, and community facilities
programs, especially in places with limited local capacity. In many
communities, RDOs serve as the lead applicant or technical assistance
provider for USDA RD programs, conducting feasibility studies, writing
grant and loan applications, and managing complex multi-agency projects
from start to finish.
This partnership is especially vital in rural areas that lack in-
house planning or grant-writing staff. RDOs help bridge that gap by
guiding communities through the process of identifying resources and
applying for USDA RD programs such as: the Water and Waste Disposal
Loan and Grant Program; the Community Facilities Direct Loan & Grant
Program; the Rural Economic Development Loan & Grant Program; the
Intermediary Relending Program; the ReConnect Loan and Grant Program;
and the Rural Business Development Grant Program, among many others.
The expertise of RDOs helps ensure that these resources are effectively
targeted and deployed in the places that need them most.
In addition to their work with USDA, RDOs are often designated as
Economic Development Districts by the U.S. Economic Development
Administration (EDA), where they lead the development of Comprehensive
Economic Development Strategies (CEDS)--planning documents that align
with USDA RD investments and are key to leveraging additional Federal
and state funding. Many also serve as Rural Planning Organizations
(RPOs) for state transportation departments, ensuring rural priorities
like road repairs and transit access are included in long-term
infrastructure plans.
RDOs further support rural resilience by partnering on disaster
recovery and hazard mitigation efforts with FEMA and state emergency
agencies. Some also assist in regional workforce development, often
serving as conveners or operators of local workforce development boards
and sector-based training initiatives.
Beyond direct project delivery, RDOs are strategic conveners. They
bring together local governments, nonprofits, businesses, and state and
Federal partners to align efforts, share resources, and speak with one
voice. By supporting USDA RD's mission at the regional level, RDOs help
ensure rural communities don't just access Federal programs--they
succeed with them.
Despite the support RDOs provide to rural communities, the
structural challenges they face remain profound and persistent. Limited
fiscal capacity, aging populations, geographic isolation, and decades
of disinvestment have left many communities without the basic
infrastructure and services their urban counterparts take for granted.
RDOs are a vital part of the solution helping rural areas overcome
barriers that no single town or county can address alone, though we are
not a silver bullet. Targeted, sustained Federal investment isn't just
helpful, it's essential to provide economic prosperity and security in
rural communities.
USDA RD Is a Vital Resource for Rural America
USDA RD is often the most important Federal partner for rural
America--not only because of the scale of its investments, but because
of its deeply place-based approach, its on-the-ground presence, and its
unmatched ability to deliver tailored, community-driven solutions where
they're needed most. Through a national network of state and field
offices, USDA RD staff work directly with local governments,
nonprofits, and community leaders to identify priorities, navigate
complex Federal systems, and unlock funding for projects that are
critical to community well-being.
What sets USDA RD apart is its ability to meet rural communities
where they are. With a flexible toolkit of grants, direct loans, and
loan guarantees, USDA RD empowers communities to structure investments
around local needs and capacity. Whether it's helping a small town
build a health clinic, financing a rural business incubator, or
partnering with one of the nearly 500 RDOs to launch a revolving loan
fund, USDA RD is often the first--and sometimes the only--Federal
partner equipped to respond to the unique realities of rural life.
Since FY 2012, USDA RD has invested over $400 billion in nearly two
million projects across the country. These are not one-size-fits-all
programs--they're strategic, high-impact investments that often fill
gaps the private sector cannot or will not address due to low
population density, limited tax bases, or lack of short-term return. In
many cases, RD is the linchpin that makes transformative rural
development possible.
A powerful example is USDA RD's partnership with SECOG to support
the town of Centerville, where local leaders needed help funding a new
water treatment facility. With RD's support, they were able to complete
a vital infrastructure upgrade that not only improved public health and
environmental safety, but that also positioned the town to attract new
business and housing development. This is what USDA RD does best--
helping rural communities solve urgent challenges today while laying
the foundation for long-term economic growth and resilience.
Recommendations for the Rural Development Title for a Farm Bill
Reauthorization
For years, USDA RD programs have had more demand than funding,
showing just how much rural America needs steady Federal support. Even
though 85 percent of the country's persistently poor counties are
rural, these communities are often forced to carry an unfair share of
the costs just to keep basic services running. Without reliable Federal
help, they're stuck making tough choices--cutting back on things like
infrastructure, healthcare, schools, or public safety just to balance
the budget. These services aren't luxuries--they're essential for the
farmers, ranchers, foresters, and families who keep rural areas going.
USDA RD is one of the few Federal programs that can really meet these
needs, and its support is more important now than ever.
A reauthorized farm bill is more than a routine policy update--it
represents a strategic investment in the future of rural America. It
provides for an opportunity for Congress to emphasize rural development
programs and strategies that will create opportunities for all rural
Americans. As Congress begins negotiations on the farm bill, we support
several key priorities in the farm bill that will boost rural
economies, create jobs, and improve the quality of life in rural
America:
Protect Key Rural Development Programs
Community Facilities Programs (CFP): This flexible funding program
provides grants and low-interest loans to communities with populations
under 20,000 for the purchase, construction, or improvement of
essential community infrastructure. Since its inception, small
communities have depended on its funding to build and sustain critical
infrastructure--such as health clinics, fire stations, schools, and
libraries--that not only improve quality of life for residents, but
also foster economic resilience and long-term development.
RDOs support local governments in understanding eligibility
requirements and apply for funding through the CFP program. For
example, in my region, SECOG helped secure over $2 million for the TM
Rural Water District to rehabilitate its Lime Drying Beds near Dolton,
SD. These beds, part of a Lime Softening Water Treatment Plant
constructed in 2008, were originally lined with a 6" clay barrier to
prevent groundwater infiltration and enable proper drying of lime
slurry for environmentally responsible land application. Over time, the
liner deteriorated, leading to significant infiltration issues. The
derecho event of May 12, 2022, further exacerbated the damage, causing
erosion from high winds, flooding, and wave action. This grant helped
restore the integrity of the beds and protect water quality for the
surrounding communities.
Rural Business Development Grants Program (RDBG): RDBG is another
critical program that helps RDOs support rural economic vitality by
supporting technical assistance, entrepreneurial training, market
research, feasibility studies, revolving micro-funds, among other
activities aimed at providing hands-on assistance to local small
businesses.
In New York, the Lake Champlain-Lake George Regional Planning
Board, with help from the RBDG program, launched the ``Small Business
Technical Assistance Program'' in 2023. Through this program, they have
been providing free technical assistance to existing and start-up
business within the region.
In Louisiana, the Acadiana Planning Commission received a $30,000
RBDG for their I-49 Midway Corridor Strategic Growth Initiative, which
will help produce a performance-based land use model to help create
opportunities and spur sustainable economic growth along the corridor.
This corridor, which is halfway between New Orleans and Shreveport,
will help unlock significant economic growth for the region by making
the communities along it more competitive for commercial investments
and business expansion projects.
Intermediary Relending Program (IRP): USDA's IRP is another
critical resource for RDOs, providing low-interest loans to local
intermediaries who use the funds to create or expand Revolving Loan
Funds (RLFs). These RLFs then support small rural businesses with
fixed-rate, term financing for working capital, equipment, and lines of
credit--often one of the few sources available. The IRP helps build
long-term economic resilience by creating a sustainable cycle of
lending: over a 30 year loan term, intermediaries typically revolve IRP
funds three times, meaning every Federal dollar results in
approximately $3 lent to rural businesses. This model reduces Federal
financial burden while driving local growth.
The South Central Tennessee Development District, which represents
35 municipal and 13 county governments in south middle Tennessee,
received an initial capitalization of nearly $1.9 million in 1991 for
their RLF. Since then, more than $8 million has been loaned to over 125
small businesses. Additionally, these funds leveraged more than $30
million in private investments, leading to the creation of nearly 500
new jobs and the retention of hundreds more.
Rural Innovation Stronger Economy (RISE): RISE addresses a critical
need for Federal support of job accelerator partnerships that drive
private investment in regional economies. Its flexibility allows
recipients to support new and existing industries, establish innovation
centers, and provide workforce development and training. These grants
help rural communities compete by creating high-wage jobs, while
building more diversified regional economies.
Meat and Poultry Intermediary Lending Program (MPILP): Designed to
counter industry consolidation by empowering smaller, independent meat
and poultry processors, MPILP provides grant funding to intermediary
lenders, who then offer affordable loans to businesses for starting,
expanding, or modernizing processing facilities, equipment, and
infrastructure. By increasing local processing capacity, MPILP
strengthens the resilience and diversity of the U.S. food supply chain,
ensuring more competition and consumer choice. This program is vital
for rural economies, helping producers thrive in a global marketplace
while lowering food costs and reinforcing national food security.
The Bear Paw Development Corporation led a coalition of five
Montana Economic Development Districts to secure a $10 million MPILP
grant, aimed at strengthening local meat processing operations. The
coalition established a revolving loan fund to support Montana-owned
facilities with capital improvements, equipment upgrades, and USDA
certification efforts. By leveraging existing relationships, staff
expertise, and interregional collaboration, the program has already
deployed millions in funding and is expanding economic opportunities
across 26 rural counties. This initiative demonstrates how regional
partnerships can translate national priorities into impactful, locally
driven economic development activities.
Rural Economic Development Loan and Grant Program (RED-LG): Though
RDOs are not directly eligible, RED-LG has a proven track record of
strengthening rural businesses and economies by providing more than
$330 million to communities through both loans and grants.
Value-Added Producer Grants (VAPG): Although RDOs are not eligible
for VAPG funding, we recognize that it is a vital program that supports
agricultural producers transform raw commodities into higher-value
products. Strengthening this program will continue to allow small- and
mid-sized farms diversify income streams, access new markets and stay
competitive amid industry shifts.
Rural Business Investment Program (RBIP): RBIP is an important
initiative that helps bridge the capital gap in rural America by
licensing Rural Business Investment Companies (RBICs) to channel
private equity into under-served communities. Rural areas often lack
access to traditional venture capital and face declining numbers of
community banks, making it difficult for entrepreneurs to secure
funding. RBIP addresses this by leveraging public support to attract
private investment, enabling scalable startups and small businesses to
grow, innovate, and create jobs locally. By treating rural regions as
emerging markets, the program fosters economic diversification and
resilience--making it essential to preserve and strengthen during
reauthorization efforts.
Rural Microentrepreneur Assistance Program (RMAP): RMAP empowers
rural small businesses by providing critical access to capital and
technical support through local nonprofit lenders. It offers microloans
up to $50,000 and grants for training, helping entrepreneurs who often
lack traditional financing due to limited credit or business
experience. By supporting startups and expansions, RMAP strengthens
local economies, creates jobs, and fosters innovation in areas
typically under-served by mainstream financial institutions. For rural
small businesses, this program is a lifeline that turns ideas into
sustainable enterprises and revitalizes communities from the ground up.
In New York, the Mohawk Valley Economic Development District
(MVEDD) received a RMAP grant to support rural small businesses. This
funding will enable MVEDD to offer hybrid workshops and one-on-one
consulting focused on financial planning, grant access, and business
growth strategies. The initiative aims to strengthen rural
entrepreneurship across the Mohawk Valley by providing practical tools
and guidance.
Water and Wastewater Disposal Loan and Grant Program: This program
is essential to communities within the SECOG service area, and across
the nation, because it helps rural communities access safe drinking
water and effective waste management systems--which are critical for
public health, environmental protection, and economic development.
These types of infrastructure projects are often cost-prohibitive
for small communities, which typically lack the tax base or financial
resources to fund them independently. Without Federal support, many of
these areas would be unable to build or upgrade the systems needed to
ensure long-term sustainability and attract new investment. By offering
affordable financing and grants, the program reduces the financial
burden on the local government while improving quality of life and
resilience in under-served regions.
Improve Access and Flexibility for Grantees
Congress should prioritize enhancing access to Federal support for
rural communities by addressing structural barriers in current grant
programs. Many existing Federal grant structures inadvertently exclude
or disadvantage rural areas due to rigid requirements that fail to
account for the unique financial and administrative challenges these
communities face.
For example, local match requirements--which often mandate that
communities contribute a set percentage of project costs--can be
prohibitive for communities with limited tax bases. Some grants require
up-front spending by the applicant, with reimbursement coming only
after the fact. This model assumes a level of fiscal flexibility that
many rural communities simply do not have. In contrast, allowing in-
kind contributions, to count toward match requirements would provide
more equitable opportunities for participation. This is particularly
important for projects like community childcare centers, where
community engagement and non-cash resources are often more readily
available than liquid funds.
Similarly, short grant timelines tend to favor projects that are
easier and faster to implement, even if they offer less long-term
benefit. Rural communities may lack the staff or consultants to quickly
produce shovel-ready proposals, pushing them toward low-impact projects
they can execute quickly rather than transformative initiatives like
broadband expansion, which require extended planning, permitting, and
coordination. Extending grant implementation periods would allow rural
areas the time needed to pursue these complex, high-impact investments
that are critical to long-term economic development.
Another pressing issue is the complexity of the grant application
process itself. Many small local governments have only one or two staff
members--or rely entirely on volunteers--and lack dedicated grant
writers. Highly technical application forms, excessive documentation
requirements, and poorly designed online portals can discourage or
prevent these communities from applying altogether. Simplifying the
application process, it would lower the barrier to entry and help
ensure that communities with the greatest need are not left behind.
Invest in Capacity Building and Technical Assistance
There is a strong need for increased investments in technical
assistance and capacity building at the USDA to better support the full
spectrum of rural businesses and economic development initiatives.
Technical assistance can help bridge this gap by providing the guidance
and expertise needed to navigate USDA programs, secure funding, and
build sustainable operations. At the same time, strengthening the
internal capacity of USDA field offices, local and regional development
organizations, and partner institutions ensures that support services
are more accessible, responsive, and tailored to the unique challenges
of rural economies. With targeted investments in training, outreach,
and organizational development, USDA can play a more effective role in
fostering innovation, job creation, and long-term economic vitality
across rural America.
USDA Reorganization Efforts Must Compliment Congress' Efforts To
Strengthen, Not Weaken, Program Delivery and Quality of
Services for Rural Communities
As the Administration pursues its goal of restructuring and
reorganizing USDA, with the stated goals of improving operational
efficiency and protecting taxpayer dollars, I urge Congress to provide
oversight and guidance to ensure that USDA remains a catalyst for rural
prosperity. In particular, it is essential to maintain a robust
footprint of local and regional USDA staff that are embedded in local
communities across the country. Local and regional USDA field staff are
the mechanism that ensures service--delivery and connectivity to our
communities. USDA field staff serve as a ``front door'' to the Federal
Government--these individuals are a tangible human connection point
that helps our communities access and navigate the complexities of
Federal funding. These staffers help us determine whether funding
sources fit our local needs, provide guidance on proper administration
of Federal funds, and help us problem-solve. Without a working
relationship with these individuals, most communities' only connection
to the Federal Government is through overwhelmingly extensive and
technical documents such as Notices of Funding Opportunity (NOFOs)
which are far from being user-friendly. Indeed, the process of applying
for Federal funds can be so daunting for rural and capacity-constrained
communities that many smaller towns and villages and rural places would
simply be left out or locked out of the process entirely, if not for
the presence of field staff who help make these processes approachable.
Similarly, as the Administration has indicated its intent to reduce
the overall volume of Federal USDA staff, I encourage USDA leadership
to work in an increasingly close and coordinated manner with locally-
based Regional Development Organizations which can, and often already
do, essentially serve as extensions of USDA staff at the local level.
RDOs have existed for decades and, similarly to agency field staff, RDO
staff members typically have extensive knowledge of Federal programs,
are expert grant writers, and help other local stakeholders apply for
Federal funding opportunities and administer Federal awards. I would
encourage Congress and agency officials to prioritize and invest in
regional entities like RDOs that work with local stakeholders to
identify and elevate local priorities and projects; conduct regional
planning processes; bring local stakeholders together; and weave
together competitive applications for Federal funding. As the volume of
Federal agency staff continues to be reduced nationally, partnerships
with local partners like RDOs that have deep expertise accessing
Federal programs will be increasingly vital.
Conclusion
Chairman Johnson, Ranking Member Davis, and distinguished Members
of the Subcommittee, thank you again for the opportunity to testify
today. USDA RD's programs are not just investments in infrastructure or
financing tools--they are lifelines for rural communities working to
build a more secure, prosperous future. These programs help level the
playing field for small towns and rural regions that too often lack
access to the capital, capacity, and partnerships needed to thrive.
As you continue negotiations on the farm bill, I encourage you to
prioritize the tools that enable rural communities to grow and succeed.
Rural America has never lacked vision or determination--what it needs
is sustained Federal partnership to continue building strong, resilient
economies that support families, attract investment, and ensure future
generations can thrive in the communities they call home.
The Chairman. Thank you, and to the 15th USDA Deputy
Secretary Torres Small, 5 minutes.
STATEMENT OF HON. XOCHITL TORRES SMALL, J.D., FORMER DEPUTY
SECRETARY, U.S. DEPARTMENT OF AGRICULTURE; EXECUTIVE DIRECTOR,
QUIVIRA COALITION, LAS CRUCES, NM
Ms. Torres Small. Chairman Johnson, Ranking Member Davis,
Ranking Member Craig, and Members of the Subcommittee, it is an
absolute joy to be back here with you. Whether it is supporting
local meat processors through the ups and downs of cattle
cycles in South Dakota, or working with chicken farmers on
innovative energy solutions to power towns in North Carolina, I
have witnessed how you put Rural Development into practice with
the people you serve. You know that local know-how needs to be
in the driver's seat, and the government's job is to support
that vision. You have also seen how vital USDA staff are to
that work.
Rural Development is the only agency in D.C. with a focus
on rural America. That experience matters. I have worked with
staff whose early experience providing housing or water loans
in rural places has made them more able to stretch
flexibilities in the midst of a disaster or save thousands of
dollars on applications and reporting for rural people. But
DOGE cuts and oversights and recent staff departure incentives
hobble an already struggling mission. While I know this
Subcommittee isn't responsible for staff funding, your
oversight is invaluable. Many state and field offices are
currently operating at half capacity. In some places, it is
worse, like Mississippi, where 90 percent of Rural Development
staff were cut last year. Nationally, only 16 engineers remain
the RD state system. Vital projects are sitting on desks
waiting for approval. Phone calls are going unanswered for
months. That is not serving rural people. Let me be clear: the
problem I am raising here today isn't simply that Federal
staffing was cut. The problem is that those cuts happened
without consulting the very people they affect. Rural Americans
are more than willing to tell us what is working and what isn't
if only we take the time to listen, and that brings me to my
second point.
When I talk with people working to make a difference for
the places they live, they ask for straightforward applications
to programs that fit their vision. People often ask what I have
seen in other places that might inform how they can solve the
challenges they face. In the long-term, we need to pivot from a
``there is a program for that'' or all of the acronyms, as
Chairman Johnson mentioned, to ``we will invest in your
strategy, here are some people who found success with similar
efforts, and we will be with you every step of the way.''
When it comes to straightforward investments, we need to
resist the temptation o