Part II of a three-part series.
Former FCC Commissioner and Chief Administrator of the USDA Rural Utilities Service Jonathan Adelstein recently discussed the challenges business owners in rural areas face – namely gaining access to capital – at MMTC’s recent Access to Capital Conference.
Commissioner Adelstein portrayed rural America as an opportunity landscape specifically because of its demographic makeup. Due to low population density in rural areas as compared to suburban or urban areas, it is much harder for entrepreneurs to get the funding they need to provide a good or a service.
“There are opportunities in rural [areas], but there are more challenges….That’s why we partner with businesses to give them more capital to overcome the financial challenges of operating in rural markets. There is a lot of opportunity in areas where there is less service,” said Commissioner Adelstein. “These are smaller markets, and the RUS is a partner in making sure that a business plan will work.” Commissioner Adelstein described the RUS as the “infrastructure bank of rural America.”
Commissioner Adelstein stated that over 30 percent of rural areas are populated by minority Americans, meaning that they too are overlooked in terms of their access to adequate communications infrastructure. He went on to discuss the RUS’s role in providing affordable financing and oversight, and in setting standards.
Commissioner Adelstein noted that the USDA is currently accepting applications for their Community Connect program, which received $103 million in funding. The program is designed to offer financial assistance to provide broadband service in rural, economically challenged communities, specifically areas that don’t currently have access to broadband.
In an effort to help connect those pockets of rural America that still lack broadband service, the USDA has been part of what has been described as “the most critical technology infrastructure challenge this country has faced since rural electrification back in the 1930s.” According to the FCC’s Rural Broadband Report, done in conjunction with the USDA, about 28 percent of rural Americans do not have access to fixed broadband at speeds of 3Mbps or faster.
Commissioner Adelstein also discussed the funding assistance the RUS offers to rural telecom providers, adding that the agency’s traditional Telecom Infrastructure Loan Program (TILP) amounts to over $600 million.
There is funding support for entrepreneurs precisely because grants and loans to small businesses will lead to further economic development in rural America. As entrepreneurs put TILP funds to good use, additional opportunities for growth in sectors that depend on high speed communications services will create more opportunity. Commissioner Adelstein referred to this as “the virtuous cycle,” where funding support for small business leads to rural community investment and growth.
USDA Undersecretary for Rural Development Dallas Tonsager voiced the same idea in remarks he delivered last year on broadband in rural areas. “When broadband comes to town, opportunities for education, health care, and economic development flourish,” he said.
The RUS’s work to boost opportunities for economic development includes their outreach efforts, which to date include the 25 awards amounting to over $110 million to minority and tribal organizations. Among the recipients are 122 plus persistent poverty counties, areas that would benefit from more attention from small business owners and entrepreneurs.
Next time: Stay tuned for former Minority Business Development Program Director David Hinson’s discussion on small business development.