Part III: Federal Resources Can Assist Rural Grocery Stores

Last month we discussed the challenges rural grocery stores face and ways to meet those challenges so that food retail in small towns remains open and accessible. This month, we highlight some of the federal programs that can be used to support, expand, and update rural grocery stores to help them compete in today’s marketplace.

The programs we mention have an assortment of differing requirements. Grocery stores with a variety of models – sole proprietorship, cooperative, public/private partnership – should be able to find programs for which they might qualify.

Rural Business Enterprise Grants (RBEG) - This grant is available to nonprofit organizations, tribal, and public entities in towns with populations less than 50,000. The program supports and facilitates development of small and emerging private rural businesses. Grants can be used for a broad range of things, from land acquisition and building construction to equipment purchase or technical assistance. Preference is given in the application process to a business in communities with a population less than 25,000 or with a high percentage of unemployed or low-income residents.

A rural grocery store could use this grant to purchase a building, coolers, shelving, or to teach business skills to the people who will own or manage the store.

Community Food Projects (CFP) - This program empowers low-income communities to identify their own food insecurity and hunger problems as well as identify the solutions that will be most successful within their community, benefiting both farmers and consumers. Only private nonprofit organizations are eligible to receive CFP funds directly, but collaborations with public and private, for-profit entities are recommended.

A rural grocery co-op could, for example, receive a grant to work with local farmers and distributors to provide retail food outlets for low-income rural communities. Though popular, this grant is flexible, so be creative!

Rural Energy for America Program (REAP) and Small Business Innovation and Research - One of the major challenges that grocery stores face is the high cost of utilities to power various coolers and freezers needed for a full-service grocery store. The Rural Energy for America Program (REAP) and the USDA/NIFA Small Business Innovation and Research (SBIR) program can both help to overcome this challenge. REAP has grants for businesses to perform energy audits or to purchase and install more energy efficient or renewable energy systems. The SBIR program awards grants to support research related to important scientific problems, and it has prioritized energy efficiency and alternative and renewable energy in the 2009 grant cycle.

A rural grocery store could receive a grant to rethink their energy usage or design a project with other researchers to investigate ways to decrease energy consumption.

Business and Industry Guaranteed Loans - The purpose of this program is to improve, develop or finance businesses and to improve the economic and environmental climate in rural communities. To do this, the Business and Industry Guaranteed Loans provide a credit structure to facilitate loans. The program reserves 5 percent of the loans for the first half of the fiscal year for the processing, distribution, and marketing of locally or regionally produced foods.

A rural grocery store could use this loan guarantee for a variety of projects, such as working with local farmers to sell more locally-produced foods in retail outlets.

Many other federal and state programs could support rural grocery stores. We suggest speaking with your USDA Rural Development State Office to find other programs for which your existing or future rural grocery store could qualify.

Contact: Steph Larsen, or 406.356.6838 for more information.

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