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June 11, 2010Client Alert

Federal and State Funding Initiatives to Help Agricultural & Rural Business Communities

The Obama Administration has continued working closely with United States Department of Agriculture (“USDA”) and the Small Business Administration (“SBA”) to improve business development and job creation in rural communities across the United States. Late last week, several federal funding program initiatives were promoted including the Value-Added Producer Grant Program, the USDA/SBA Rural Business Agreement, the USDA Rural Development's Intermediary Relending Program and Rural Economic Development Loan and Grant Program. In addition, last week the Wisconsin Department of Commerce (“Commerce”) announced tax credits are now available under the Food Processing Plant and Food Warehouse Modernization/Expansion Program. Details regarding each of these program initiatives are outlined below.

USDA Value-Added Producer Grant Program:
Authorized as part of the 2008 Farm Bill, funding of more than $22.5 million has been made available through USDA Rural Development assistance under the Value-Added Producer Grant program. Funds under this program may be used for feasibility studies or business plans, working capital for marketing value-added agricultural products and for farm-based renewable energy projects. Eligible applicants include independent producers, farmer and rancher cooperatives, and agricultural producer groups. Under this program, value-added products are created when a producer increases the consumer value of an agricultural commodity in the production or processing stage. The USDA announced selection of recipients in 45 states and Puerto Rico that will receive assistance, and funding of individual recipients is contingent upon their meeting the conditions of the grant agreement. A list of recipients can be viewed at: (June 3, 2010) Agriculture Secretary Vilsack Announces Funding To Assist Agricultural Producers and Cooperatives Across the Country.

USDA/SBA Agreement to Stimulate Rural Business Creation and Expansion: A newly signed three year agreement between the USDA and SBA aims to encourage business growth and small business job creation in rural communities by increasing access to capital. Under this agreement the USDA Rural Development's Rural Business Service will provide loan guarantees, loans and grants, and the SBA will provide loan guarantees. Additional details about this agreement and financing opportunities can be viewed at: (June 3, 2010) Agriculture Secretary Vilsack and Small Business Administrator Mills Announce Agreement To Stimulate Rural Business Creation and Expansion.

USDA Rural Development's Intermediary Relending Program and Rural Economic Development Loan and Grant Program: $6.7 million in grant and loan funding is being provided through USDA Rural Development's Intermediary Relending Program and the Rural Economic Development Loan and Grant program. The Rural Economic Development Loan and Grant program provides zero-interest loans to utility cooperatives which are passed through to local businesses for projects to create and retain employment in rural areas. The Intermediary Relending Program provides funds to organizations to establish revolving loan pools that are used to finance business and economic development activity to create or retain jobs in rural communities. The USDA announced selection of recipients in 10 states that will receive funding to promote economic development and job creation through increased business lending. A list of recipients can be viewed at: (June 3, 2010) USDA Announces Loans and Grants To Help Rural Businesses Create Jobs and Get Expanded Access To Capital.

Wisconsin Food Processing Plant & Food Warehouse Modernization and Expansion Tax Credits: In a Michael Best client alert released in April (Dairy and Food Processing Tax Credit Legislation Sent To Governor ) we informed you of two new investment tax credits including the Dairy & Livestock Investment Tax Credit and the Food Processing and Food Warehouse Investment Tax Credit that were recently signed into law by Governor Doyle. These initiatives aim to create jobs and strengthen Wisconsin’s agribusiness economy by investing in dairy and food processing operations. Commerce has announced tax credits are now available for the latter program. Under this program, businesses can earn up to 10 percent of the eligible expenses spent in the taxable year for modernizing and expanding food processing plants and food warehouses. The maximum amount a business can receive over the life of the program is $200,000. The application deadline for these tax credits for the first round of funding is June 18, 2010, and the second round of funding is February 15, 2011. Additional details about this program can be viewed at: Dept. of Commerce.

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