Why did the Center for Rural Affairs start REAP?
The rural Midwest suffered through difficult economic times in the 1980’s and early 1990’s. High interest rates and low prices for traditional farm commodities caused many farmers to sellout. Rural communities suffered as population and demand for products and services declined. Rural communities sought new economic development strategies to replace the losses suffered due to changes in the agriculture economy.
In 1989, the Center conducted a study of economic development approaches in Minnesota, North Dakota, South Dakota, Iowa, Kansas and Nebraska. This pioneering study, Half a Glass of Water, discovered a high rate of self-employment in rural areas.
The Center found that 48 percent of all earned income in farm-based counties was from farm and non-farm proprietorships. This was 70 percent higher than the comparable rate from other rural counties and five times the rate of metropolitan areas. Twenty-seven percent of non-farm income came from self-employment.
At the time, traditional economic development was focused on factory recruitment. Nebraska has over 400 communities with a population of 2,000 or less. These communities lacked the population base to provide workers for a factory and were being left out of economic development efforts.
The Center for Rural Affairs held focus group meetings of micro business owners to explore their needs. Three gaps in services for micro businesses were identified: training/technical assistance, lending and networking. REAP was started in January 1990 to fill these gaps. See an Historic Timeline of REAP from the beginning to present day.
Who was key to getting the program going?
Gene Severens is the first name to remember. Gene conceptualized REAP’s basic structure and served as lead fundraiser and designer of the original group-based lending model. Early on he studied micro lending theory and visited micro lending models in the U.S. – only a handful existed back then.
Jennifer Tully worked with Gene in the very beginning. When she got married and left the Center, another key figure came on the scene – Rose Jaspersen. REAP was about half-way through the design process when Rose brought her “Managing Mainstreet” business training skills to the fore. She designed the entire training component of the original REAP model, making it more viable.
The small town of Cedar, Rapids, Nebraska, played a critical role. Gene and Rose traveled to Cedar Rapids in the fall of 1990 to form the first REAP association. Micro business owners and community development staff from Cedar Rapids had participated in the initial focus groups. They requested to be the first site for a REAP association.
A group of eight members worked with REAP staff through an orientation process. It involved familiarizing members with lending applications, collecting baseline member data, developing bylaws for the association, electing officers, and ensuring a complete understanding of how the lending process would work.
In December of 1990 the first loan of $1,000 was made using a step-up, peer lending model. A loan could be for no more than $1,000 and did not require collateral or prior training.
Now 20 years later, REAP has placed nearly 700 loans totaling over five million dollars while also leveraging over 12 million dollars in loans from other sources due to REAP assistance. Since 1990, REAP has provided development services to over 10,000 micro businesses.
Rural entrepreneurs deserve the credit.
Design and implementation of REAP in 1990 required a strong visionary and working Board of Directors, a committed and talented staff, and receptive participants and partners. But through the 20-year life of the project, the rural entrepreneurs we have had the pleasure to serve have been the heart of REAP. They inspire us to keep lending, advising, and growing to meet their needs.
REAP filled a critical niche in 1990 and continues to fill a critical niche for Nebraska’s startup and existing entrepreneurs today. We look forward to the next 20 years continuing our mission of strengthening rural communities through small, self-employed business development.
Contact: Jeff Reynolds, REAP Program Director at firstname.lastname@example.org or 402.656.3091.
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