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Minnesota

Business and Industry Guarantee Loan Program

Outline of Need:
Perham, MN, population 2,688 is a thriving rural community in part because of three USDA Rural Development programs. Charles Cavanagh, president of United Community Bank says Rural Development’s Business and Industry loan program has enabled his bank to partner with a dozen other community banks to leverage millions of dollars to finance major expansions at the city’s largest employer, KLN Enterprises.
How Rural Development Helped:
The company’s roots date back to 1973 when the Tuffy Nelson family founded Barrel O’ Fun. The company was later sold but re-purchased by Nelsons through a $6.55 million Rural Development Business & Industry (B&I) guaranteed loan. The manufacturer has continued to grow in employees and products, from potato chips to pop corn. Recently, KLN’s Kenny Nelson received an $11.75 million Rural Development B&I loan through United Community Bank to expand its snack food manufacturing business.

The Results:
Cavanagh says these loans have allowed the city’s largest employer to remain local, not only providing jobs but also community service and leadership. KLN Enterprises also owns Kenny’s Candy, Tuffy’s Pet Foods, and Nutri-Source. All totaled, KLN and Tuffy’s employ approximately 600 people in Perham, MN.

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Intermediary Relending Program

Outline of Need:
The City of Perham, MN is an Intermediary Re-lending Program (IRP) partner with Rural Development. Rural Development has loaned the city $1.75 million to fuel its revolving loan fund for business creation and expansion.

The Results:
City economic developer Chuck Johnson says 34 businesses have received loans through the IRP program, resulting in the creation and/or saving of 482 jobs. Johnson says Perham is highly unique because it has more jobs than residents so its labor shed covers three counties that are home to a number of low income residents. He said, “Rural Development’s business programs have been a contributing factor in Perham’s success.”

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Rural Economic Development Grant Program

Outline of Need:
East Otter Tail Telephone, based in Perham, MN, relies on USDA Rural Development’s Rural Economic Development Loan and Grant (REDLG) program to encourage economic development in its cooperative telephone service area. The facility provides up-to-date high-tech services for existing and startup businesses. Its high-tech workforce training center is also available for community education, distance learning and more.

How Rural Development Helped:
1. The REDLG program allows a utility co-op to borrow up to $450,000 at zero percent interest for up to ten years if it finances loans for business expansion, community projects, feasibility studies, and telecommunication or community television systems. East Otter Tail, now called Arvig Communication, contributed a 20 percent match to obtain a $330,000 Rural Development loan for the Perham Area Emergency Services Center and Community Technology Center.

The Results:
Additional REDLG loans have allowed Arvig to finance a MeritCare Clinic in New York Mills, Tuffy’s Pet Foods in Perham, and Diamond Tool for expansion of its manufacturing plant in Bertha, MN. Arvig spokesman David Schornack says loans and grants from USDA Rural Development make a huge difference because most of these REDLG projects would not have happened without the federal government’s help.