Entrepreneur Fund, Great River Energy celebrate 5 years of program partnership

The world has changed in so many ways since 2018. In this era of post-pandemic uncertainty, the challenges faced by small businesses and entrepreneurs are well documented in daily headlines, from staffing shortages and supply chain issues, to rising interest rates and increased material costs.

Access to capital is one challenge that has remained a constant throughout; and as is often the case with hurdles facing small business owners and entrepreneurs, rural businesses tend to have an even tougher time than their metro counterparts when securing the capital needed to facilitate growth.

Back in 2018, Great River Energy recognized the outstanding work being done by the Entrepreneur Fund to tackle this challenge in rural Minnesota and funded a $1 million program loan aimed at helping the Entrepreneur Fund to expand its impact in the communities served by Great River Energy’s member-owner cooperatives.

The Entrepreneur Fund delivers flexible and fair lending solutions in 29 counties and 10 Native nations, including many areas served by Great River Energy member-owner co-ops in northeast Minnesota, northwest Wisconsin, and east central Minnesota. By combining access to capital with highly skilled business advising, Entrepreneur Fund has created a model that is proven to help rural businesses thrive.

According to research published by the Consumer Financial Protection Bureau, less than 10% of people in rural counties work in typically associated industries like agriculture, while 42% reportedly work for small businesses. Yet the same study shows that as the importance of small businesses expands in rural America, access to traditional bank financing has contracted.

Indeed, the Federal Reserve Bank of St. Louis has identified 1,132 existing “bank deserts,” 65% of which are in rural areas. This figure includes numerous existing and potential bank deserts in Minnesota, most of which are in the northern half of the state.

Even when small businesses and entrepreneurs have access to traditional financing in their communities, sometimes their ideas are just too new, or the loan requests too small, or the risk profile too high for a traditional lender to accept. So, while larger to mid-sized businesses may get the loans they need to grow, smaller businesses and start-ups are often left with fewer options.

Minnesota’s rural electric cooperatives have long understood the challenges posed by this lack of access to traditional sources of business financing, which is why Great River Energy and many of its member-owner cooperatives offer low- or no-interest loan programs designed work with traditional bank financing to help get business investments and expansions off the ground. However, while the interest rates for these programs are low, so at times is their tolerance for risk, and we are certainly not equipped to offer hands-on business consulting services. 

The $1 million program loan funded by Great River Energy in partnership with the Entrepreneur Fund in 2018 was aimed at serving those businesses that would not otherwise have access to the existing loan programs offered by our member-owner cooperatives. After five years into a 10-year term, both organizations are ready to report: It’s working.

As of Jan. 1, 2023, the original $1 million in loan capital funded by Great River Energy has been disbursed and revolved by the Entrepreneur Fund through 27 loans totaling just over $2.3 million in capital for businesses served by Great River Energy member-owner cooperatives.

Four different cooperative areas have been impacted by these activities, including East Central Energy, Lake Country Power, Mille Lacs Energy and Stearns Electric Association. Most of these loans went to manufacturers (26.2%), businesses in the retail/hospitality sector (25.8%), and construction-related industries (23.8%). 

“As a CDFI, the sweet spot of our work is when capital and service-based support can come together to support an entrepreneur,” said Shawn Wellnitz, CEO of the Entrepreneur Fund. “Our work supports the business owner that is seeking out opportunities to scale and grow, and we as an organization are constantly cultivating new ways to offer different capital and services to support entrepreneurs as they progress up the chain of business. Great River Energy has been a great partner in this work.”

Great River Energy is proud of its program partnership with Entrepreneur Fund and our combined efforts to support the economic vitality of the communities we serve. If you would like to learn more about our business financing and community development tools, please contact Tom Lambrecht at tlambrecht@GREnergy.com.

“We had the passion, but not the full knowledge of how to approach a bank and how to really put the funding together in a way that made sense. That’s where the Entrepreneur Fund came in.” – Aimee and Preston Osborne, owners of Lakewood Lodge in Deerwood, Minnesota. Read their full story here.